Initiate long positions to tag on a deeper rebound play. The FKLI performed positively in the latest session. At the closing, it crossed above the previous immediate resistance of 1,613 pts and came close to testing the downtrend line (as drawn in the chart). The session’s low and high were posted at 1,604.5 pts and 1,622.5 pts, before it closed 7.5 pts higher at 1,619.5 pts. Given that the index has managed to hold above the 1,600-pt round figure and with the breakout from the said previous immediate resistance, there is a good chance it may be able to post a stronger counter-trend rebound. Towards the upside, should the said downtrend line be breached, we expect the 200-day SMA line to be tested. We switch our trading bias to positive.

Our previous short positions – initiated at 1,698 pts, the closing level of 1 Mar – were closed out at the 1,613-pt mark in the latest session. On the bias that a stronger counter-trend rebound may be developing, we initiate long positions at the latest closing level. A stop-loss can be placed below 1,590.5-pts.

The immediate support is revised to 1,573 pts, the low of 14 May. This is followed by 1,550 pts. Meanwhile, the immediate resistance is now pegged at 1,646 pts, the high of 7 May. This is followed by 1,656.5 pts, the high of 26 Mar.

Source: RHB Securities Research - 30 May 2019