Maintain long positions while keeping trailing-stop tight. Yesterday, the FKLI formed a white candle that sent it even closer to testing the 200-day SMA line – it is currently at 1,788 pts. It pencilled a low and high of 1,779 pts and 1,787 pts, before ending at 1,783.5 pts, marking a gain of 5 pts. As the index continued to exhibit positive momentum, despite heading into the important resistance zone of between said SMA line and the immediate resistance of 1,800 pts, this implies the rebound (developing since the low of 1,655 pts on 28 Jul) is still firmly intact. Hence, we maintain our near-term positive trading bias.

As the rebound continues to be extended, and the index is closing in to test the 200-day SMA line, we advise traders to keep to long positions, initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, we revise the trailing-stop to 1,766.5 pts.

We revise the immediate support to 1,766.5 pts, the low of 31 Jul. This is followed by 1,740 pts, the low of 20 Jul. Towards the upside, 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 - 2 Aug 2018