The bulls are pushing towards the immediate resistance; maintain long positions. The FKLI performed positively in the latest session and in the process, it came close to testing the immediate resistance of 1,700 pts – the intraday high was recorded at 1,699.5 pts. The index settled 10.5 pts higher at 1,698.5 pts. The positive session is an indication that the bulls are still having firm control over the index after it breached above both the downtrend and 200-day SMA lines in the previous session. Broadly, the counter-trend rebound that started from the 14 May’s “Piercing Line” formation is still in place. Maintain our positive trading bias.

As the index continues to extend its rebound, and in the absence of price exhaustion signals, we recommend traders 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.

Towards the downside, the immediate support is set at 1,633.5 pts, 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 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 - 3 Jul 2019