Maintain long positions as the index is still trading in a narrow consolidation phase. The FKLI shed 4.5 pts last Friday to close at 1,593.5 pts, with a low and high of 1,592 pts and 1,606 pts. The index has been undergoing a consolidation after it tested the immediate resistance of 1,621.5 pts recently – a level that coincides with the 200-day SMA line. For now, as long as the 50-day SMA line is not decisively breached, the index’s multi-month countertrend rebound that started from 10 Oct’s low of 1,547.5 pts should remain in place. We maintain our positive trading bias.

Without a clear price signal to indicate an end to the countertrend rebound, traders are advised 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 point.

Immediate support is expected 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. Meanwhile, the immediate resistance is at 1,621.5 pts, the high of 9 Aug, followed by 1,650 pts.

Source: RHB Securities Research - 13 Jan 2020