Maintain long positions as the bulls are still taking a pause. Yesterday’s performance can be characterised as neutral – ending marginally higher by 1.5 pts at 1,762 pts. This came after the FKLI ranged between a low and high of 1,756 pts and 1,764.5 pts. This latest performance can be regarded as part of the index’s consolidation phase, which has been in development over the latest four sessions, after the recent upward move. Once this consolidation phase is completed, the index may scale higher to test the 1,800-pt level, which is also located near the 200-day SMA line. On these still encouraging technical interpretations, we maintain our near-term positive trading bias.

As the on-going consolidation phase is still healthy and not showing signs which may suggest that a deeper retracement is developing, we continue to advise traders to keep to long positions, initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, a trailing-stop can be at set at 1,740 pts.

Towards the downside, the immediate support is pegged 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. This is followed by 1,844.5 pts, the high of 23 May.

Source: RHB Securities Research - 25 Jul 2018