Maintain long positions as there is no evidence pointing to a price exhaustion. The FKLI shed 6 pts to close at 1,692.5 pts, after trading between 1,685 pts and 1,699 pts yesterday. The negative session came after the index came close to testing the 1,700-pts immediate resistance in the previous session and on the back of the overbought Daily RSI reading. However, the negative performance has not generate sufficient signals to suggest the counter-trend rebound that started from the low of the 14 May’s “Piercing Line” formation has indeed reached an end. Hence, we keep to our positive trading bias.

As the counter-trend rebound’s technical picture is still encouraging, we recommend that 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.

We are keeping the immediate support at 1,633.5 pts, the low of 17 Jun. Breaking this may see the market test 1,613 pts, the high of 13 May. Moving up, the immediate resistance is set at 1,700 pts. This is followed by 1,730, near the high of 21 Feb.

Source: RHB Securities Research - 4 Jul 2019