Maintain long positions, as a countertrend rebound is still in effect. The FKLI formed a white candle to settle 7.5 pts stronger at 1,598 pts. The intraday tone was encouraging, as the index generally trended higher for the whole session. At one point, the bulls tested the 1,600-pt level with an intraday high of 1,602.5 pts. We still believe that the countertrend rebound that started from the low of 1,547.5 pts on 10 Oct has not hit a peak yet. The recent sessions’ price actions merely suggest that a minor pause is taking place below the immediate resistance of 1,621.5 pts. As such, we keep to our positive trading bias.

As it is very likely that the recent minor pause may have been completed with the latest session’s positive close, 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.

Immediate support is at 1,564.5 pts, the low of 21 Oct, followed by 1,547.5 pts, the low of 10 Oct. Meanwhile, the immediate resistance is still 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 - 25 Nov 2019