Maintain long positions to ride the countertrend rebound phase. The FKLI experienced a relatively strong session. At the closing, it added 18.5 pts to close at 1,595.5 pts – breaching above the previous resistance zone of 1,573- 1,585 pts. The intraday tone was encouraging as the index generally trended higher, with the low and high recorded at 1,578.5 pts and 1,596 pts. The breakaway from the said resistance zone indicates the countertrend rebound, which started from the low of 1.547.5 pts on 10 Oct – is continuing to develop. The RSI is also showing signs of picking up without flashing out an overbought condition. This supports the case of a rebound extension. Maintain our positive trading bias.

As the bulls continue to signal a firm control over the countertrend rebound, 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 now be set to the breakeven level.

The immediate support is pegged at 1,547.5 pts, the low of 10 Oct, followed by 1,500 pts. Towards the upside, the immediate resistance in now eyed at 1,600 pts, this is followed by 1,610 pts, which was the high of 30 Aug.

Source: RHB Securities Research - 1 Nov 2019