Maintain long positions as countertrend rebound remains in play. The FKLI closed slightly lower by 3 pts last Friday, at 1,611 pts. The low and high were recorded at 1,609 pts and 1,616.5 pts. The negative session, which can be regarded as the bulls taking a minor pause, did not flash out a price exhaustion signal. Overall, we still believe the countertrend rebound that started from the low of 1,547.5 pts on 10 Oct is in place. The rebound set in to correct the index’s retracement leg between early July and early October. As such, we keep to our positive trading bias.

As the rebound may still have legs, traders should 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 at the breakeven point.

Towards the downside, immediate support is pegged at 1,564.5 pts, the low of 21 Oct. This is followed by 1,547.5 pts, the low of 10 Oct. Moving up, the immediate resistance is at 1,610 pts, the high of 30 Aug, followed by 1,621.5 pts, the high of 9 Aug

Source: RHB Securities Research - 11 Nov 2019