Continue to bounce higher; maintain long positions. Yesterday, the FKLI performed positively, as its formed a white candle and closed the day at 1,686 pts, implying a 14-pt gain. Intraday, the low and high were recorded at 1,679 pts and 1,688 pts. Overall, we maintain the bias for the index to rebound higher as the low of 1,655 pts on 28 Jun remains intact – this is despite the rebound not being as strong as what we envisaged. This rebound, 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.. Hence, we maintain our near-term positive trading bias.

Given that the index’s bias to rebound higher is still valid and in the absence of a technical signal to suggest the resumption of the multi-month retracement, we continue to recommend that traders stay in long positions, initiated at 29 Jun’s closing level of 1,688.5 pts. For risk management purposes, a stop-loss can be set at 1,655 pts.

We maintain the immediate support at 1,655 pts, the low of 28 Jun. The following support may be found at 1,600 pts, or the next round figure. Towards the upside, 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 - 11 Jul 2018