Counter-trend rebound may still be extending; maintain long positions. The FKLI ended the latest session lower by 6 pts at 1,648.5 pts with the low and high recorded at 1,646.5 pts and 1,655 pts. The weak session came after the index tested the immediate resistance of 1,656.5 pts in the prior session. Despite this, we are not seeing a clear price rejection from the said immediate resistance. Instead, the latest weakness can be seen as a possible sign of a minor pause after the recent rally. As such, the counter-trend rebound that started from the 14 May’s “Piercing Line” formation is still deemed as valid. Maintain our positive trading bias.

As the risk of the counter-trend rebound hitting an end is low for now, 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 pegged at 1,613 pts, the high of 13 May. The second support may emerge at 1,573 pts, or the low of 14 May. Moving up, 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 - 12 Jun 2019