Maintain long positions as the sideways consolidation phase is developing. The FKLI closed 9.5 pts weaker at 1,684.5 pts last Friday. The intraday tone was negative as the index generally trended lower for the entire session, while the low and high were registered at 1,682 pts and 1,692.5 pts. Recent sessions suggest that the index is undergoing a consolidation phase below the 1,700-pt immediate resistance mark – which implies that we are not seeing signs of a price rejection from the level. As such, the counter-trend rebound that started from the low of 14 May’s “Piercing Line” formation is still in place. We maintain our positive trading tone. 

As we are not seeing a deterioration in the technical picture, 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 still expected 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, followed by 1,730, near the high of 21 Feb.

Source: RHB Securities Research - 8 Jul 2019