Maintain long positions. The FKLI formed a black candle in the latest session. It settled 18 pts lower at 1,691 pts. Intraday, the tone was negative, as the index generally moved lower throughout the session with the high and low posted at 1,709 pts and 1,689 pts. Nevertheless, we are still expecting the index’s rebound, which started from the 25 Oct’s bullish “Piercing Line” formation, to remain intact. Towards the downside, the risk for the index to resume its multi-month declining trend would still be low, for now – provided the low of the said bullish formation is not breached. The ongoing rebound set in following the index’s sharp price retracement, after it was rejected from the 200-day SMA line on 10 Oct. Hence, we maintain our positive trading bias.

As the bias for the index to extend its rebound is still in place, we continue to recommend that traders stay in long positions – which we initiated at 1,718 pts or 2 Nov’s closing level. For risk management purposes, a stop-loss can be placed at 1,655 pts.

The immediate support is expected at the 1,655-pt level, the low of 28 June. The second support is set at the 1,600- pt mark. Moving up, the immediate resistance is now expected at 1,749.5 pts, or the high of 17 Oct. This is followed by 1,779 pts, the high of 10 Oct.

Source: RHB Securities Research - 13 Nov 2018