Maintain long positions as the rebound is still playing out. The FKLI ended marginally lower by 2.5 pts at 1,756.5 pts. The index swung between 1,754.5 pts and 1,768 pts during the session. The session did not suggest any technical signs that could imply the index’s rebound – in development since the low of 1,655 pts – has ended. Room for a further rebound is still available, given the daily RSI reading is still at below overbought territory. On this technical background, we maintain our near-term positive trading bias.

Given the bias for an extended rebound is still in place, we continue to recommend that traders stay in long positions, initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, trailing-stop can be set at 1,725 pts, the low of 19 Jul.

Immediate support is set at 1,735 pts, the low of 4 Jun. This is followed by 1,655 pts, the low of 28 Jun. Towards the upside, the immediate resistance is now pegged to 1,800 pts, near the high of 7 Jun. The following resistance may emerge at 1,844.5 pts, the high of 23 May.

Source: RHB Securities Research - 20 Jul 2018