No price exhaustion yet; maintain long positions. The FKLI shed 11.5 pts to close at 1,586.5 pts – which was also the day’s low. Price actions over the recent weeks indicate that the index is undergoing a consolidation below the immediate resistance of 1,621.5 pts. This was meant to correct the rebound that took place between 10 Oct (low point of 1,547.5 pts) and 12 Nov. Once this consolidation phase is completed, we expect the countertrend rebound to resume. As such, we are maintaining our positive trading bias.

As the index’s rebound phase has yet to reach its top, 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.

We maintain the immediate support 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 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 - 26 Nov 2019