Maintain long positions. Last Friday witnessed the FKLI edging higher throughout the session, thus forming a white candle. This suggests the session was led by the bulls. The session’s low and high were posted at 1,707.5 pts and 1,722.5 pts, before closing 13 pts higher at 1,719 pts. The positive session is supportive of our bias for the index to extend its rebound – after reaching a low of 1,655 pts on 28 Jun, which saw the daily RSI reading hit the oversold level of 24. For now, as long as the said low is not invalidated, the bias for the index to extend its rebound would remain intact. Hence, we maintain our near-term positive trading bias.

Given that the rebound continues to develop and not show signs of exhaustion, we continue to recommend that traders stay in long positions, initiated at 29 Jun’s close 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. Breaking this may see the market test 1,600 pts. Towards the upside, the immediate resistance is at 1,735 pts, the low of 4 Jun. This is followed by 1,800 pts, near the high of 7 Jun.

Source: RHB Securities Research - 16 Jul 2018