Maintain long positions, as we still expect the rebound to be extended. The FKLI continued to challenge the resistance zone of 1,573-1,585 pts yesterday. It hit an intraday high of 1,574.5 pts before sliding back to settle 1 pt higher, at 1,570.5 pts. We maintain that the index is still staging a countertrend rebound, after completing its latest retracement phase, which took place between early July and mid-October. Without signs of further weakness, the emergence of the “Bearish Engulfing” formation on 18 Oct indicates that the rebound is undergoing a minor pause. We maintain our positive trading bias.

As the countertrend rebounded may be extended, traders are advised to remain in long positions. We initiated these at 1,565 pts, the closing level of 14 Oct. To manage risks, a stop loss can be set below 1,547.5 pts.

We maintain the immediate support target at 1,547.5 pts, the low of 10 Oct, followed by 1,500 pts. Moving up, the immediate resistance is at 1,585 pts, near the lower boundary of the sideways move that developed between midAugust and early October. This is followed by the 1,600-pt mark.

Source: RHB Securities Research - 25 Oct 2019