Bulls are pushing ahead; keep to long positions. The FKLI had a positive session yesterday, forming a white candle that broke above the previous immediate resistance of 1,735 pts. The low was at 1,725 pts, and closing level as well as high was at 1,759 pts, implying a gain of 34 pts. The breach of the previous immediate resistance reinforces the bias for the index to extend its rebound after hitting a low of 1,655 pts on 28 Jun. So far, the rebound is still healthy, as its RSI reading of 62.9 is still below the overbought level. With no sign of bulls losing steam, we maintain our near-term positive trading bias.

As the bias for an extended rebound is still firmly intact – recall that we maintain that the current batch of rebounds is a corrective pattern that set in after the index’s previous multi-month decline – we continue to recommend that traders stay in long positions, which we initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, we revise our trailing-stop to 1,725 pts, the latest session’s low.

We also revise the immediate support to 1,735 pts, the low of 4 Jun. This is followed by 1,655 pts, the low of 28 Jun. On the flip side, immediate resistance is now pegged to 1,800 pts, near the high of 7 Jun. This is followed by 1,844.5 pts, the high of 23 May.

Source: RHB Securities Research - 19 Jul 2018