Retain long positions as the index has broken away from its minor consolidation phase. The FKLI formed a white candle – at the closing, it breached above both the downtrend (as drawn in the chart) and 200-day SMA lines, albeit marginally. The session’s low and high were recorded at 1,682 pts and 1,689.5 pts, before closing 10 pts higher at 1,688 pts. The positive session also means the index has a breakaway from the narrow multi-day sideways consolidation phase. We are maintaining our positive trading bias for now, as the index continues to show strength in the resistance zone that consists of the said downtrend line and 1,700-pt mark.

As the bulls are still showing clear signs of maintaining control over the price trend, we continue to recommend traders to stay in long positions – which we initiated at 1,619.5 pts. A stop-loss can now be placed below 1,671 pts, the low of 25 Jun.

The immediate support is still expected to emerge at 1,633.5 pts, the low of 17 Jun. This is followed by 1,613 pts, the high of 13 May. Moving up, the immediate resistance is set at 1,700 pts, being the next round figure. This is followed by 1,730, near the high of 21 Feb.

Source: RHB Securities Research - 2 Jul 2019