Maintain long positions, as the bias for a rebound extension is still in place. The FKLI closed negatively yesterday, but managed to cut losses towards the end of the session. For the intraday, the index swung between a low and high of 1,677.5 pts and 1,690.5 pts, before closing at 1,683 pts, indicating a decline of 10 pts. Overall, the bias for the index to extend its rebound is still valid. This is because the low of the “Piercing Line” formation which appeared on 25 Oct is still valid – suggesting the risk of a return of the multi-month decline is low at the moment. The on-going rebound phase set in after the index experienced a sharp retracement, as its daily RSI reached an oversold threshold recently after it breached the 200-day SMA line on 4 Oct. Hence, we maintain our positive trading bias.

We continue to recommend that traders stay in long positions – which we initiated at 1,718 pts or 2 Nov’s closing level. To manage risks, a stop-loss can be placed at 1,655 pts.

Immediate support is set at the 1,655-pt level, the low of 28 June. The second support is 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 - 15 Nov 2018