Maintain long positions as the bulls may be now ready to extend the rebound. The FKLI formed a white candle to close at 1,647 pts, indicating a gain of 9 pts. The session’s intraday tone was encouraging as the index generally trended higher for the whole session, with the low and high registered at 1,635.5 pts and 1,651 pts. Overall, we still see good signs of the index’s counter-trend rebound, which started from the low of the 14 May’s “Piercing Line” formation as still in force. The recent price weaknesses below the immediate resistance of 1,656.5 pts are just an indication of a minor pause. Hence, we keep to our positive trading bias.

In the absence of negative price actions that suggest the counter-trend rebound has reached an end, we continue to recommend traders to stay in long positions – initiated at 1,619.5 pts. A stop-loss can now be placed at the breakeven level.

The immediate support may be found at 1,613 pts, the high of 13 May. Breaking this could 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, followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 19 Jun 2019