Rebound still in place; keep to long positions. The FKLI closed neutrally yesterday, as it managed to rebound from the weakness in the early part of the session. The day’s low and high were posted at 1,668.5 pts and 1,686 pts, before it closed at 1,684 pts, signalling a 2.5-pt decline. The positive intra-day rebound continued to reinforce our view that the index is in a consolidation phase after the previous retracement that sent the daily RSI reading into oversold levels. That said, this rebound is still not as strong as we estimated. As long as the immediate support of 1,655 pts is not breached, the bias for the FKLI to extend its rebound should stay intact. On these technical points, we maintain our near-term positive trading bias.

As the bias for the index to extend its rebound is still valid and there is no indication of a further 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.

Immediate support is set at 1,655 pts, the low of 28 Jun. Breaking this may see the market test 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 - 12 Jul 2018