Maintain long positions as the index is still showing signs of consolidating. The FKLI climbed 5 pts to close at 1,683.5 pts yesterday. Trading ranged between 1,677 pts and 1,686 pts. The closing level has also placed the index slightly back above the 200-day SMA line. We deem the index’s upward move that started from the low of 14 May’s “Piercing Line” formation as still intact. Recent sessions’ price actions continue to suggest a minor consolidation phase is likely developing below the 1,700-pt immediate resistance level. We maintain our positive trading bias.

As the index continues to show signs of developing a consolidation phase, instead of a price reversal from 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 expected to emerge 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 - 10 Jul 2019