Maintain long positions, as the index is merely undergoing a consolidation phase. The FKLI close 9 pts lower yesterday, at 1,597.5 pts – taking it back below the 1,600-pt level. For the intraday, the index swung between a low and high of 1,596.5 pts and 1,603 pts. The negative session, in our view, was just a part of the index’s relatively narrow sideways consolidation phase, developed over the past one week below the 1,621.5-pt immediate resistance. This consolidation phase kicked in to correct the index’s upward move, which took place between early October and early November. As we are not seeing major risks that a correction will develop in the form of a deep retracement, we are retaining our positive trading bias.

As the countertrend rebound may still be extending, 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.

Immediate support is set at 1,564.5 pts, the low of 21 Oct, followed by 1,547.5 pts, the low of 10 Oct. On the other hand, the immediate resistance is still pegged at 1,621.5 pts, the high of 9 Aug. This is followed by 1,635 pts, which is near the 200-day SMA line.

Source: RHB Securities Research - 21 Nov 2019