Deeper rebound still in effect; maintain long positions. The FKLI charted a neutral session, ending marginally higher yesterday as it started the day at 1,727.5 pts, before dipping to a low of 1,714 pts. After that, it rebounded towards the day’s end and closed 2.5 pts higher at 1,721.5 pts. This does not change our overall expectation that it will rebound even more, there was no signal of a reversal. For now, as long as the recent low of 1,655 pts is not breached, we maintain our near-term positive trading bias.

We still regard the index’s movement since the low of 1,655 pts on 28 Jun as a corrective rebound that set in after it reached an oversold level. As technical evidence still supports the extension of the rebound, we still recommend that traders stay in long positions – which we initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, set a stoploss at 1,655 pts.

Immediate support is at 1,655 pts, the low of 28 Jun. This is followed by 1,600 pts. Meanwhile, 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 - 17 Jul 2018