Maintain long positions on rebound play. Yesterday, the FKLI performed positively, as it managed to pull itself from the weakness in the early part of the session to end 6 pts higher at 1,688.5 pts. Intraday, the low and high were recorded at 1,670 pts and 1,691.5 pts respectively. We continue with our thesis that the index is in the process of staging a rebound. This, in our view, at the minimum, represents 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 on 27 Jun. Given the rebound continues to play out, we stick with our near-term positive trading bias.

The index’s recent movements show signs of a rebound, which would remain valid for as long as the recent low of 1,655 pts is not broken. As such, we continue to recommend traders to maintain long positions, initiated 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 set at 1,655 pts, the low of 28 Jun. The following support may emerge at 1,600, or the next round figure. On the other hand, the immediate resistance is at 1,735 pts, which was the low of 4 Jun. This is followed by 1,800 pts, which was near the high of 7 Jun.

Source: RHB Securities Research - 5 Jul 2018