Rebound is still showing strength; maintain long positions. The FKLI ended the latest session 6 pts higher at 1,683 pts. The session’s low and high were recorded at 1,677.5 pts and 1,685 pts. The index’s price actions over the recent sessions are resembling the characteristics of a consolidation phase. This ongoing consolidation phase is taking place in an area near the 1,700-pt immediate resistance, and 200-day SMA line. We regard this as a healthy development to correct the index’s prior upward move. Hence, we keep to our positive trading bias.

As the bulls are showing signs of taking a pause, instead of signalling a price rejection 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, the immediate support is expected 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. Moving up, the immediate resistance is set at 1,700 pts, followed by 1,730 pts, near the high of 21 Feb.

Source: RHB Securities Research - 12 Jul 2019