Maintain long positions as the rebound phase is still developing. The FKLI dipped by only 1 pt to close at 1,692 pts yesterday. For the intraday, trading ranged between 1,687 pts and 1,702.5 pts. From looking at the index’s performance since the low of the “Piercing Line” formation on 25 Oct, it is likely that the rebound is still developing – and it will remain so, provided the low of the said formation is not invalidated. Towards the upside, we believe that it could at least test the immediate resistance of 1,749.5 pts. Hence, we maintain our positive trading bias.

As there is no indication that the rebound phase is reaching an end, 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.

Towards the downside, immediate support is eyed at the 1,655-pt level, or the low of 28 June. The following support is at the 1,600-pt mark. On the other hand, 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 - 23 Nov 2018