Maintain long positions to ride the unfinished rebound. The FKLI ended the latest session 4.5 pts stronger at 1,613 pts. This was after it reached a low and high of 1,605.5 pts and 1,618 pts. Overall, we are still seeing the countertrend rebound, which started from the low of 1,547.5 pts on 10 Oct, progressing. The RSI reading of 67 suggests the rebound has yet to reach an overbought condition. In our view, the rebound is meant to correct the downward leg between early July and early October. We maintain our positive trading bias.

As recent price actions are indicating the countertrend rebound is still firm, 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 at the breakeven point.

We revise the immediate support to 1,597 pts, the low of 4 Nov, this is followed by 1,564.5 pts, which was the low of 21 Oct. Towards the upside, the immediate resistance is envisaged to emerge at 1,621.5 pts, the high of 9 Aug. This is followed by 1,635 pts, near the 200-day SMA line.

Source: RHB Securities Research - 13 Nov 2019