Maintain long positions as the index is just undergoing a consolidation. The FKLI formed a black candle to settle 13.5 pts weaker yesterday, at 1,599.5 pts. The session’s low and high were registered at 1,595 pts and 1,608.5 pts. Recent sessions’ price actions are suggesting a minor consolidation is taking place, at around the 50-day and 200-day SMA lines. This bias should remain unchanged, as long as there is no decisive breakdown from the 50-day SMA line. All in, we still believe the index’s countertrend rebound phase that started from 1,547.5 pts recorded on 10 Oct is still in place. We maintain our positive trading bias.

As there is no indication that the rebound has reached a top, traders are recommended to remain in long positions. We initiated these at 1,568 pts, the closing level of 6 Dec. To manage risks, a stop-loss can be placed at the breakeven level.

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

Source: RHB Securities Research - 7 Jan 2020