Maintain long positions as deeper rebound is still favoured. The FKLI ended the session on a positive note. Intraday, it recorded a low and high of 1,681.5 pts and 1,691 pts, before closing at 1,687.5 pts, a gain of 3.5 pts. Broadly, chances are high for the index to extend its rebound, which started from the low of the “Piercing Line” formation on 25 Oct – provided the low of the said formation does not breach the downside. Towards the upside, this positive bias would be further enhanced should the index able to crack above the downtrend line (as drawn in the chart). We are expecting, at the very least, the immediate resistance of 1,749.5 pts to be tested by this ongoing rebound phase. Hence, we maintain our positive trading bias.

As we are expecting this rebound to move toward the said immediate resistance, we 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.

The immediate support is expected at the 1,655-pt level, the low of 28 June. The following support is at the 1,600- pt mark. Conversely, 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 - 29 Nov 2018