Technical picture remains positive; maintain long positions. The FKLI closed 1.5 pts higher at 1,694 pts yesterday, after ranging between 1,690 pts and 1,697 pts. The index’s price actions in the latest three sessions continue to suggest that a minor consolidation phase is developing below the 1,700-pt immediate resistance mark. This is healthy, as it corrects the FKLI’s recent uptrend, which led to an overbought Daily RSI reading recently. All in, the counter-trend rebound that started from 14 May’s “Piercing Line” formation is still intact. We maintain our positive trading bias.

In the absence of adverse price actions from the area near the said immediate resistance, we recommend that traders stay in long positions – which we initiated at 1,619.5 pts. A stop-loss can be placed below 1,671 pts, the low of 25 Jun.

Towards the downside, immediate support is pegged at 1,633.5 pts, the low of 17 Jun. This is followed by 1,613 pts, the high of 13 May. Meanwhile, the immediate resistance is set at 1,700 pts, followed by 1,730, near the high of 21 Feb.

Source: RHB Securities Research - 5 Jul 2019