No signs of rebound reaching an end; maintain long positions. The FKLI managed to reverse its earlier session’s weakness to end 6.5 pts higher at 1,650.5 pts. The low and high were posted at 1,640 pts and 1,652 pts. Overall, the counter-trend rebound that started from the 14 May’s “Piercing Line” formation is still showing signs of firmness. The latest two sessions’ price actions can be seen as an indication of a minor pause, this was after the index crossed above the downtrend (as drawn in the chart) and the 50-day SMA lines recently. Hence, we are keeping our positive trading bias.

In the absence of a price reversal signal from the immediate resistance level of 1,656.5 pts, 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, the immediate support is still pegged at 1,613 pts, the high of 13 May. This is followed by 1,573 pts, or the low of 14 May. Moving up, the immediate resistance is now eyed at 1,656.5 pts, ie the high of 26 Mar. This is followed by 1,694.5 pts, which was the high of 19 Mar.

Source: RHB Securities Research - 10 Jun 2019