Rebound is extending; maintain long positions. Despite closing the latest session only marginally higher, the FKLI’s intraday tone was positive as it managed to rebound from the early losses. The session’s low and high were recorded at 1,764 pts and 1,772.5 pts, before it closed 2.5 pts higher at 1,772 pts. While the recent sessions’ upward moves have become less impulsive, the rebound since the low of 1,655 pts is still firmly intact and is not showing technical signs of exhaustion. In the near term, the bias for the index to challenge the 200-day SMA line is still positive. Hence, we maintain our near-term positive trading bias.

As the index continued to show sign of rebound extension and that no signs of reversal are spotted on the daily chart, 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.

Towards the downside, immediate support is expected to emerge at 1,735 pts, the low of 4 Jun. The following support is at 1,655 pts, the low of 28 Jun. On the other hand, the immediate resistance is at 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 - 31 Jul 2018