Maintain long positions. The FKLI closed yesterday’s session on a slightly positive note, as it advanced 4 pts to 1,725 pts. For the intraday, it largely moved sideways and charted a low and high of 1,715.5 pts and 1,728.5 pts. In studying the latest two sessions’ price actions, we believe the FKLI may now consolidating between the immediate resistance of 1,735 pts and the 1,700-pt round figure. As there is no sign of the rebound running out of steam – it started from a low of 1,655 pts – we maintain our near-term positive trading bias.

The index’s corrective rebound that started since the low of 1,655 pts on 28 Jun has set in after it reached an oversold level. It is also not showing any sign of reversing – indeed, it continues to be biased towards an extension. As such, 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 stop-loss at 1,655 pts.

Towards the downside, the immediate support is at 1,655 pts, the low of 28 Jun. The following support is pegged at 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 - 18 Jul 2018