Maintain long positions. The FKLI closed on a neutral note yesterday. During the intraday, it attempted to break away from the consolidation phase (highlighted in our recent reports), with an intraday high of 1,769.5 pts. However, it failed to hold to this positive momentum and slipped lower from that point to close at 1,763 pts, signifying a minor gain of 1-pt. The session’s low was at 1,757.5 pts. Despite the failed attempt to break from the consolidation zone, the index’s overall positive bias is still valid as it has not flashed out a price reversal signal. On these observations, we maintain our near-term positive trading bias.

With the bulls still trying to break from the minor consolidation zone that has been developing in recent sessions – this suggests the rebound from the low of 1,655 pts still has strength. As such, 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 set at 1,740 pts.

Immediate support may be found at 1,735 pts, the low of 4 Jun. The second support is at 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. This is followed by 1,844.5 pts, the high of 23 May.

Source: RHB Securities Research - 26 Jul 2018