Initiate long positions as the bulls managed to crack above the immediate resistance. The FKLI formed a white candle in the latest session and at the closing crossed above the previous immediate resistance of 1,706 pts – albeit marginally. Intraday tone was positive, as the index generally moved higher with the low and high posted at 1,690 pts and 1,708.5 pts, before closing at 1,707.5 pts, indicating a gain of 18 pts. The breakout from the said previous immediate resistance came after the index tested the 50-day SMA multi-times recently – suggesting the bulls managed to wrest the control over the price directions. Hence, we switch our trading call to positive.

Our previous short positions which were initiated at 1,664.5 pts, the closing level of 2 Jan, were closed out at 1,706 pts in the latest session. On the thesis that the rebound may now be resuming, we initiate long positions at the latest closing. For risk management purposes a stop-loss can be placed at below 1,664 pts.

Immediate support is revised to 1,664 pts, which was the low of 2 Jan. This is followed by 1,631.5 pts, the low of 18 Dec 2018. On the other hand, the immediate resistance is now set at 1,729 pts, the high of 8 Nov. This is followed by 1,749.5 pts, the high of 17 Oct 2018.

Source: RHB Securities Research - 20 Feb 2019