Stay long, while setting a stop-loss below the 1,547.50-pt support. The FKLI closed on a black candle yesterday. It declined 2 pts to close at 1,560 pts, off the session’s high of 1,571.50 pts. As the index has managed to stay above the previously-indicated 1,547.50-pt support for two months, it suggests that the upside move is not over yet. Given that the FKLI has formed a “Hammer” pattern on 3 Dec, this indicates a potential rebound. Overall, we maintain a positive view on FKLI’s outlook.     

Based on the daily chart, the immediate support level is at 1,547.50 pts, determined from the previous low of 10 Oct. If a decisive breakdown arises, the next support is anticipated at the 1,500-pt psychological spot. Towards the upside, we are eyeing the immediate resistance level at 1,585 pts, ie the high of 29 Nov. Meanwhile, the next resistance would likely be at 1,621.50 pts, obtained from the high of 9 Aug.     

Hence, we advise traders to maintain long positions, since we had originally recommended initiating long above the 1,568-pt level on 9 Dec. In the meantime, a stop-loss set below the 1,547.50-pt threshold is preferable, in order to minimise the downside risk.

Source: RHB Securities Research - 12 Dec 2019