\Maintain long positions despite the rebound phase still volatile. The FKLI ended the latest trading session on a negative note – at the closing, it weakened by 18.5 pts to settle at 1,693 pts. The session’s low and high were posted at 1,686 pts and 1,698.5 pts. Despite this, the “Piercing Line” formation which emerged on 25 Oct is still holding up – this indicates the bias for the index to extend its rebound is still valid, and the risk for the index’s multimonth retracement to resume is still relatively low. We are expecting this ongoing rebound phase to at least test the immediate resistance of 1,749,5 pts. Hence, we maintain our positive trading bias.

As the bias for the index to extend its rebound phase is still in effect, 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 stoploss can be placed at 1,655 pts.

The immediate support is set at the 1,655-pt level, or 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 - 22 Nov 2018