Maintain long positions as there are no clear signs of breakdown from the 50-day SMA line and immediate support. The FKLI managed to recoup most of its intraday losses in the latest session. At one point, it slipped below the 50-day SMA line – the low was recorded at 1,585 pts. This was before it rebounded to close near the said SMA line at 1,591.5 pts, a 2-pt decline. As we have highlighted in our recent reports, as long as there is no clear breakdown from the said SMA line, we would still consider the countertrend rebound that started from the 1,547.5-pt support level as still valid. This means that price actions over the past two weeks merely indicate a pause by the bulls. Maintain our positive trading bias.

As we still believe the countertrend rebound has yet to peak, 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.

The immediate support is maintained at 1,592 pts, near the midpoint of 18 Dec’s “Long White Day” candle – as it was not decisively breached in the latest session. This is followed by 1,547.5 pts, the low of 10 Oct. On the other hand, the immediate resistance is at 1,621.5 pts, the high of 9 Aug, followed by 1,650 pts.

Source: RHB Securities Research - 14 Jan 2020