Maintain long positions as the counter-trend rebound may still continue. The FKLI ended the latest session weak. It settled 6.5 pts lower at 1,636 pts – the intraday tone was negative as it generally slid lower for the entire session, with the low and high posted at 1,633.5 pts and 1,645 pts. The index has been on the retracing mode in recent sessions, after it tested the immediate resistance of 1,656.5 pts on 10 Jun. At this juncture, we are still seeing the said retracement as a sign that the bulls are taking a breather. Overall, the counter-trend rebound that started from the low of the 14 May’s “Piercing Line” formation is still in place. This is further supported by the fact the index is still trading above the 50-day SMA line. Maintain our positive trading bias.

Given the bias for the counter-trend to extend further is still valid, 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 expected at 1,613 pts, the high of 13 May. This is followed by 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, followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 17 Jun 2019