Maintain short positions until the “Bullish Harami” formation is confirmed. The FKLI settled the latest session 4 pts higher at 1,588 pts. This was after it swung between a low and high of 1,583 pts and 1,589 pts. The index continued to trade within the sideways range formed over the past 1.5 months. Based on the daily chart, the latest positive session did not produce any price reversal signal, ie the 7 Sep “Bullish Harami” formation is still unconfirmed. The said positive formation needs to be confirmed (to be signalled by an upside breach of 1,600 pts) before a stronger rebound can develop. As such, we maintain our negative trading bias.

Until the bulls are able to signal a change in control over the price trend, traders are advised to 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 be placed above the 1,600-pt mark.

We are keeping the immediate support target at 1,573 pts, the low of 14 May. This is followed by the 1,550-pt mark. Towards the upside, the immediate resistance is set at 1,621.5 pts, the high of 9 Aug. This is followed by the 1,660.5-pt mark, the high of 24 Jul.

Source: RHB Securities Research - 2 Oct 2019