Negative bias stays; maintain short positions. The FKLI ended the latest session marginally weaker by 1 pt to settle at 1,580 pts. This came after it reached a low and high of 1,578.5 pts and 1,585 pts. The price actions over the past 1.5 months suggests that the commodity is trading in a sideways pattern. Additionally, 7 Sep’s “Bullish Harami” formation is still unconfirmed. The confirmation (upside breach of 1,600-pt level) of the said formation is needed to signal the index is ready to stage a stronger rebound. Until this happens, the index’s weak bias would still be intact. We maintain our negative trading bias.

With the bulls still unable to retake control over the price trend, traders should remain in short positions. We initiated these at 1,668 pts, or the closing level of 12 Jul. To manage risks, a stop-loss can now be placed above the 1,600-pt mark.

Immediate support is expected to emerge at 1,573 pts, the low of 14 May. This is followed by the 1,550-pt mark. On the other hand, the immediate resistance is set at 1,621.5 pts, or the high of 9 Aug. This is followed by the 1,660.5-pt mark, the high of 24 Jul.

Source: RHB Securities Research - 1 Oct 2019