Upward bias likely to continue; stay long positions. The FKLI closed on a positive note, moving from the midmorning’s low of 1,662.5 pts to a high of 1,687 pts, before ending at 1,682.5 pts, representing a gain of 11.5 pts. The latest positive session reinforces our view that the index is in the midst of a deeper rebound. At the moment, we see this rebound as a correction phase for the index’s recent bout of retracement, which (happened after the failed attempt to break above the 200-day SMA line on 6 Jun) sent the RSI to an oversold level of 24 of 27 Jun. Hence, we retain our near-term positive trading bias.

As the near-term bias for the index to rebound higher is still strong, and as long as the immediate support of 1,655 pts is not breached, we continue to recommend traders to maintain long positions. We initiated these on 29 Jun’s closing level of 1,688.5 pts. For risk management purposes, a stop-loss can be set at 1,655 pts.

Immediate support is pegged at 1,655 pts, the low of 28 Jun. This is followed by 1,600, or the next round figure. Toward the upside, the immediate resistance is at 1,735 pts, which was the low of 4 Jun. The second resistance may emerge at 1,800 pts, which was near the high of 7 Jun.

Source: RHB Securities Research - 4 Jul 2018