Maintain long positions as there is no negative price follow-up. The FKLI managed to stage an intraday positive price reversal to settle marginally better by 0.5-pt at 1,588 pts. This was after it reached an intraday low of 1,577 pts. The recent two sessions’ price actions suggest there is still a lack of technical evidence of a firm breakdown from the 50-day SMA line. As such, we are of the view that the countertrend rebound that started from the low of 1,547.5 pts on 10 Oct 2019 is still in effect. Meanwhile, a breach 14 Jan’s low of 1,571 pts should signal the end of the said rebound. Premised on this, we maintain our positive trading bias.

As the bulls are still seen to be in control over the said 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 below 1,571 pts.

We are keeping the immediate support at 1,547.5 pts, the low of 10 Oct. This is followed by 1,500 pts, a round figure. Moving up, the immediate resistance is expected to emerge at the 1,600-pt mark, followed by 1,621.5 pts, the high of 9 Aug, followed by 1,650 pts.

Source: RHB Securities Research - 16 Jan 2020