Maintain long positions, as the bulls are almost cracking the triangle. The FKLI formed a white candle yesterday and came close to breaking out from the 3-week “Symmetrical Triangle” consolidation. The index posted a low and high of 1,692 pts and 1,705 pts, before closing at 1,704 pts, indicating a gain of 19.5 pts. This supports our bias that the index had most likely completed its final leg of a “Symmetrical Triangle” last Friday, and it may break away from this consolidation to extend its rebound. If this happens, at the very least, we expect the index to test the immediate resistance of 1,749.5 pts. Hence, we maintain our positive trading bias.

As bull are showing a firm control, 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.

We still peg the immediate support at the 1,655-pt level, the low of 28 June. This is followed by 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 - 4 Dec 2018