Maintain long positions as the bulls are holding up. The FKLI ended the latest session on the strong side, adding 14 pts to settle at 1,609 pts. This was after it reached a low and high of 1,595 pts and 1,610.5 pts. The positive session suggests that there was no negative follow-up from the prior session’s relatively sharp decline, which came after the index tested the immediate resistance of 1,621.5 pts recently. All in, we are still holding the view that the index’s countertrend rebound is still not showing signs of hitting a top. Hence, we keep to our positive trading bias.

As there is no price confirmation to suggest that the bulls have ceded control over to the bears, 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 stoploss can now be placed below 1,592 pts.

The immediate support level is set at 1,592 pts, set near the midpoint of 18 Dec’s “Long White Day” candle, followed by 1,547.5 pts, the low of 10 Oct. Towards the upside, the immediate resistance is expected at 1,621.5 pts, the high of 9 Aug. This followed by 1,650 pts.

Source: RHB Securities Research - 3 Jan 2020