Maintain long positions. The FKLI ended the latest session on the negative tone, as it failed to hold onto the early positive momentum. It ceased the day 5 pts lower to 1,799 pts – which was also the session’s low. The high was recorded at 1,810.5 pts. This latest price action may suggest some form of consolidation phase is in the early stages of development. Further observation is needed to determine the type of possible consolidation ie sideway or deeper retracement. Additionally, the index’s overall positive bias is still valid, supported by the fact that it is still trading above the 200-day SMA line. Hence, we maintain our near-term positive trading bias.

The index’s rebound since the low of 1,655 pts on 28 Jun remains valid and there is still no clear sign of possible retracement developing. 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.

The immediate support is expected to emerge at 1,766.5 pts, the low of 31 Jul. the second support is set at 1,740 pts, the low of 20 Jul. Towards the upside, 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 - 10 Aug 2018