Stay long while setting a new trailing-stop below the 1,676.50-pt level. The FKLI ended higher to form a black candle on Monday. It closed at 1,692.50 pts, after hovering between a high of 1,699 pts and low of 1,688 pts. Based on the current outlook, we maintain our positive view, as the index has remained below the 21-day SMA line. Technically speaking, as long as the bullishness of the 27 Dec’s upside gap is not nullified, this shows that the rebound is still in effect. As such, we believe that the bulls still have control over the market.

Presently, we anticipate the immediate support level at 1,676.50 pts, determined from the upside gap support of 27 Dec. The crucial support is seen at 1,631.50 pts, which was the previous low of 18 Dec. To the upside, the immediate resistance level is situated at 1,706.50 pts, ie the high of 27 Nov’s long black candle. The next resistance would likely be at 1,729 pts, obtained from the previous high of 8 Nov.

Therefore, we advise traders to stay long, since we had originally recommended initiating long above the 1,677-pt level on 28 Dec. For now, a new trailing-stop can be set below the 1,676.50-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 2 Jan 2019