Initiate long positions on the prospect of a stronger rebound phase developing. After being capped by the 50- day SMA line in the previous two sessions, the FKLI closed on a strong footing last Tuesday, adding 25.5 pts to close at 1,529 pts. This, in turn, confirmed 11 Sep’s “Bullish Engulfing” formation, which appeared near 29 Jun low of 1,476 pts. Additionally, the RSI has also crossed above the resistance line (as drawn in the chart) – pointing towards the momentum picking up again. Premised on this, we switch our trading bias to positive.

Our previous short positions – initiated at 1,569.5 pts, the closing level of 3 Aug – were closed out at 1,520 pts in the latest trading session. Concurrently, we initiate long positions. To manage risks, a stop-loss can be set below 1,498.5 pts.

The immediate support is revised to 1,515 pts, followed by 1,498.5 pts, the latest low. Moving up, resistance points are pegged at 1,544.5 pts, followed by 1,565 pts – a level slightly above the 200-day SMA line.

Source: RHB Securities Research - 17 Sept 2020