Maintain long positions to ride on the countertrend rebound. The FKLI staged a positive intraday price reversal to settle 3.5 pts higher at 1,607 pts yesterday, which took it further above the 1,600-pt mark. This came after it reached a low of 1,598.5 pts in the earlier session. We still believe the index’s countertrend rebound that started from the low of 1,547.5 pts on 10 Oct still has the potential to be extended further. Price actions in the recent session indicate that the index is consolidating below the 1,621.5-pt resistance, instead of undergoing a price rejection. We maintain our positive trading bias.

As the bulls still have firm control over the countertrend rebound, 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 maintain the immediate support target at 1,564.5 pts, the low of 21 Oct, followed by 1,547.5 pts, the low of 10 Oct. Moving up, the immediate resistance stays 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 - 20 Nov 2019