Bulls are extending the rebound; maintain long positions. The FKLI formed a white candle in the latest session that, at the closing, crossed above both the downtrend (as drawn in the chart) and 50-day SMA lines. This indicates that the counter-trend rebound that started from the low of the “Piercing Line” on 14 May is extending. The session’s tone was positive, as the index generally trended up for the whole session, from a low of 1,616 pts in the earlier part of the session, to settle at the session’s high of 1,637 pts, implying a 18-pt gain. In the absence of price exhaustion signals, we hold on to our positive trading bias.

As the bulls have signalled they are in firm control, breaching above the downtrend and SMA lines, we continue to recommend that traders remain in long positions, which were initiated at 1,619.5 pts. A stop-loss can now be placed at the breakeven level.

Towards the downside, we are keeping the immediate support at 1,573 pts, the low of 14 May. This is followed by 1,550 pts. On the other hand, 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 - 31 May 2019