Maintain long positions as long as the 1,655-pt level holds. Last Friday, the FKLI declined 19.5 pts to close at 1,666.5 pts. The index generally trended lower throughout the session with the high and low recorded at 1,690 pts and 1,666.5 pts. Based on the price pattern that has been developing since 28 Jun’s low of 1,655 pts, our bias for the index to chart a deeper rebound is still not panning out – and there is an increased risk for the immediate support to be tested again. Towards the downside, the said low has to be breached in order for a further retracement to be triggered. Until that happens, we maintain our near-term positive trading bias.

Until the immediate support of 1,655 pts is broken – which would signal the resumption of the index’s multi-month retracement, we continue to recommend that traders stay in 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. This is followed by 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, near the high of 7 Jun.

Source: RHB Securities Research - 9 Jul 2018