Riding the countertrend rebound; maintain long positions. The FKLI settled 9 pts higher to close at 1,614 pts yesterday, after breaching above the previous immediate resistance of 1,610 pts. The intraday tone was positive as the index generally trended north. The low and high were recorded at 1,599 pts and 1,614.5 pts. The breakaway from the previous resistance indicates that the bulls still control the index’s countertrend rebound. As the RSI reading is still below the overbought threshold, further upside from current level is still possible. We maintain our positive trading bias.

As the countertrend is likely to be extended further, traders are recommended 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 are keeping the immediate support target at 1,564.5 pts, the low of 21 Oct. This is followed by 1,547.5 pts, the low of 10 Oct. On the other hand, the immediate resistance is now pegged at 1,621.5 pts, the high of 9 Aug, followed by 1,635 pts, around the 200-day SMA line.

Source: RHB Securities Research - 8 Nov 2019