Maintain long positions. The FKLI traded in a narrow range of between 1,674 pts and 1,679.5 pts, before closing almost flat at 1,677 pts ie a slight gain of 0.5 pts. The relatively uneventful session suggests a possible pause is taking place after the index’s recent upward move. The said pause is happening in the resistance zone that consists of the downtrend line (as drawn in the chart) and the 1,700-pts level. Price actions over the coming sessions around this zone are crucial in signalling the index’s next directional bias. A firm upside breach could indicate a potential extension of the rebound phase that started from the low of the 15 May’s “Piercing Line’ formation, whereas a price rejection would increase the risk for a deeper retracement to develop. As such, we keep to our positive trading bias.

As there are no clear price reversal signals from the said resistance zone, 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 pegged at 1,633.5 pts, which was the low of 17 Jun. This is followed by 1,613 pts, the high of 13 May. On the other hand, the immediate resistance is pegged at 1,700 ps, the next round figure. This is followed by 1,730, near the high of 21 Feb.

Source: RHB Securities Research - 25 Jun 2019