Maintain long positions as recent weaknesses are part of a consolidation phase. The FKLI eased 6.5 pts to close at 1,677 pts yesterday. The intraday tone was negative as the index generally trended lower, while the high and low were registered at 1,687.5 pts and 1,675.5 pts. The close also again placed the index slightly below the 200-day SMA line. Despite the recent weaknesses, we note that the index is likely developing a consolidation phase below the 1,700-pt immediate resistance and around the said SMA line. By extension, the rebound that started from the low of 14 May’s “Piercing Line" formation is still considered as intact. We maintain our positive trading bias.

In the absence of adverse price signals that could suggest the rebound phase has reached an end, 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.

Immediate support is still pegged at 1,633.5 pts, the low of 17 Jun. This is followed by 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 pts, near the high of 21 Feb.

Source: RHB Securities Research - 11 Jul 2019