Maintain long positions, as the bias for a rebound is still on the cards. The FKLI posted a low and high of 1,702 pts and 1,711 pts, before closing at 1,705.5 pts, implying a gain of 5.5 pts. Broadly, we continue to believe it is developing a deeper rebound – at the minimum, we expect it to test the immediate resistance of 1,749.5 pts. This rebound started from the low of the “Piercing Line” formation on 25 Oct, and 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 is still showing signs of extending and the risk of multi-month weak price trend resuming is considered low at this juncture, 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.

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 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 - 19 Nov 2018