Maintain long positions as the index is heading towards a confluence of resistance. The FKLI settled the latest session higher at 1,673.5 pts. This placed the index towards a resistance zone that consists of the downtrend line (as drawn in the chart) that stretches from the high of Apr 2018 and 1,700 pts (being the next round figure), which is also slightly above the 200-day SMA line. Price actions in the coming sessions around this area is crucial in signalling the index’s next directional bias. A firm upside breach would mean the counter-trend rebound, that started from the 14 May’s “Piercing Line” formation, could potentially extend further. Meanwhile, a reversal may suggest the said rebound has probably reached its end. For now, we keep to our positive trading bias.

Given that the bulls are still able to extend the rebound, we continue to recommend traders to stay in long positions – initiated at 1,619.5 pts. A stop-loss can now be placed at below 1,651 pts, the high of 18 Jun.

The immediate support is eyed at 1,633.5 pts, which was the low of 17 Jun. This is to be followed by 1,613 pts, the high of 13 May. On the other hand, the immediate resistance is revised to 1,700 ps, being the next round figure. This is followed by 1,730, near the high of 21 Feb.

Source: RHB Securities Research - 21 Jun 2019