Maintain long positions. The FKLI had a positive session in its latest trading as it formed a white candle which pushed the index to close at above the previous immediate resistance of 1,800 pts – albeit marginally. Intraday, the index generally trended higher from a low of 1,792 pts to a high of 1,804.5 pts, before closing at 1,804 pts, a gain of 13 pts. The positive closing reinforced the bias for the rebound, which has been in development since the low of 1,655 pts on 28 Jun, to extend further – as it has not shown signs of exhaustion. This comes despite the daily RSI is now slightly above the overbought threshold. On this, we maintain our near-term positive trading bias.

As positive bias continues to extend – now located slightly stronger above the 200-day SMA line – this implies a positive bias. We therefore 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 1,766.5 pts.

We maintain the immediate support at 1,766.5 pts, the low of 31 Jul. This is followed by 1,740 pts, the low of 20 Jul. On the other hand, the immediate resistance is now set at 1,844.5 pts, the high of 23 May. This is followed by 1,876.5 pts, the high of 15 May.

Source: RHB Securities Research - 9 Aug 2018