Maintain long positions as the rebound may be resuming. The FKLI formed a white candle in a bullish session yesterday. The intraday tone was encouraging, as the index generally scaled higher for the entire session. The low and high were at 1,680 pts and 1,719.5 pts, before the index closed 16.5 pts higher at 1,699.5 pts. The strong session may indicate that the deep retracement of recent sessions may have ended, and the index is now ready to rebound further. The rebound that started from the low of the “Piercing Line” formation on 25 Oct was triggered after the index underwent a sharp retracement, after it breached the 200-day SMA line on 4 Oct. Hence, we maintain our positive trading bias.

As the rebound may now be resuming, we continue to recommend that traders maintain 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.

Towards the downside, immediate support is maintained at the 1,655-pt level, the low of 28 June. This is followed by the 1,600-pt mark. Conversely, 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 - 16 Nov 2018