Maintain long positions. Last Friday, the FKLI charted a positive movement, as it rebounded from the negative territory during the day to register a gain of 2.5 pts towards the close at 1,759 pts. The session’s low and high were at 1,740 pts and 1,759.5 pts. The latest two sessions’ price movements also suggest that the index is probably in a consolidation mode. For now, there is no technical sign that could suggest that a deeper consolidation may be developing. Hence, we maintain our near-term positive trading bias.

As the latest two sessions point to a mild consolidation, the risks of a steeper retracement or the resumption of the declining trend since April are low. Hence, we continue to recommend that traders stay in long positions, initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, we revise the trailing-stop to 1,740 pts.

We maintain the immediate support at 1,735 pts, the low of 4 Jun. This is followed by 1,655 pts, the low of 28 Jun. On the other hand, the immediate resistance is now pegged to 1,800 pts, near the high of 7 Jun. The second resistance is pegged at 1,844.5 pts, the high of 23 May.

Source: RHB Securities Research - 23 Jul 2018