Countertrend rebound is showing continuation; maintain long positions. The FKLI formed a white candle, which at the closing, decisively crossed above the 50-day SMA line – this indicates the index’s countertrend is still developing. For the intraday, the index reached a low and high of 1,573.5 pts and 1,605.5 pts, before ending 22 pts stronger at 1,602 pts. The positive session also sent the index above the previous immediate resistance of 1,585 pts. While the index has reached our minimum target, in the absence of price exhaustion signal, chances are high that it can scale higher. Maintain our positive trading bias.

As the bulls are still in control over the rebound, we recommend that traders remain in long positions. We initiated these at 1,568 pts, the closing level of 6 Dec. To manage risks, a stop-loss can now be placed at the breakeven level.

The immediate support is now pegged at 1,563 pts, the low of 17 Dec, followed by 1,547.5 pts, the low of 10 Oct. Towards the upside, the immediate resistance is now expected at 1,621.5 pts, the high of 9 Aug. This followed by 1,650 pts.

Source: RHB Securities Research - 19 Dec 2019