Maintain long positions. The FKLI’s Friday session was led by the bears – at the closing it eased 16 pts to settle at 1,658 pts. Intraday, the tone was discouraging as the index generally moved lower for the entire session with the high and low posted at 1,671.5 pts and 1,656 pts. Nevertheless, the bias for the index to extend its rebound is still in pace, provided the YTD low of 1,648.5 pts is not broken. Towards the upside, a deeper rebound may take place should the index managed to breach above the downtrend line (as drawn in the chart). Hence, we are keeping our positive trading bias.

As risk for the index’s downtrend resuming is still low at this juncture, we continue to suggest that traders keep to long positions, which we initiated at 1,662.5 pts – the closing level of 12 Dec. For risk management purposes, a stop loss can be placed at below 1,648.5 pts.

We still peg the immediate support at 1,648.5 pts, the low of 11 Nov. Breaking this may see market test the 1,600-pt mark, a round figure. Moving up, the immediate resistance is expected at 1,729 pts, the high of 8 Nov. This is followed by 1,749.5 pts, the high of 17 Oct.

Source: RHB Securities Research - 17 Dec 2018