Maintain long positions until signs of deeper retracement emerge. The FKLI ended the latest session 6 pts weaker at 1,678.5 pts, with the intraday trading between 1,673 pts and 1,682.5 pts. The closing level also placed the index marginally below the 200-day SMA line. Price actions in the coming sessions are crucial; a decisive breakdown from the said SMA line would likely signal a price rejection from the 1,700-pt immediate resistance. If this happens, it may suggest, at the minimum, a deeper retracement is at risk of developing. Until we see signs of this, we keep to our positive trading bias.

Until the bears show signs of taking control of the price trend, 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.

We keep the immediate support target 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. On the other hand, the immediate resistance is set at 1,700 pts, followed by 1,730, near the high of 21 Feb.

Source: RHB Securities Research - 9 Jul 2019