Maintain long positions as the bears are retesting the lower bound of the “Symmetrical Triangle”. The FKLI formed a white candle in yesterday’s trading – this is despite settling lower as it managed to reverse most of the early session’s losses. The index rebounded from a low of 1,680.5 pts to a high of 1,692, before ending at 1,688.5 pts, a decline of 9 pts. The session also saw the index re-test the lower bound of the “Symmetrical Triangle” consolidation formation, which has been taking shape over the past four weeks. Recall that the index needed to breakout from the said formation to signal the next leg of the rebound. Should this happen, chances are high for the index to test the immediate resistance of 1,749.5 pts. Hence, we maintain our positive trading bias.

As there is no downside break from the said formation – which, if happens, would nullified the pattern – we recommend that traders stay in long positions, 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 maintained at the 1,655-pt level, the low of 28 June. This is followed by 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 - 6 Dec 2018