Maintain long positions as the bulls are trying to breach above the immediate resistance. The FKLI closed 4 pts higher yesterday, at 1,654.5 pts. It briefly tested the immediate resistance of 1,656.5 pts. Overall, the index’s countertrend rebound that started from 14 May’s “Piercing Line” formation is still developing. There were no price rejection signals from the said immediate resistance in the latest session – so the risk of a downside reversal is low, at this juncture. The Daily RSI reading of 64.7 also signals the rebound has yet to reach an oversold situation. Hence, we are keeping our positive bias on the index.

As the bulls are still showing strength in driving the trend and without a price reversal signal from the said immediate resistance, we continue to recommend that traders remain in long positions, which were initiated at 1,619.5 pts. A stoploss can now be placed at the breakeven level.

Immediate support is expected at 1,613 pts, the high of 13 May. Breaking this may see the market test 1,573 pts, or the low of 14 May. On the other hand, the immediate resistance is set at 1,656.5 pts, ie the high of 26 Mar. This is followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 11 Jun 2019