Maintain long positions. The FKLI failed to hold on to its prior session’s closing above the 50-day SMA line, ending 9 pts weaker to close at 1,587.5 pts. Trading took place between 1,587 pts and 1,598 pts. While the failure to hold above the said SMA line is a negative observation, based on the daily chart, there is still lack of a clear price signal to indicate a price rejection from the said SMA. We still believe the countertrend rebound that started from the low of 1,547.5 pts on 10 Oct would stay in place as long as the immediate support of 1,571 pts is not breached to the downside. Maintain our positive trading bias.

Pending confirmation for a price rejection from the said SMA line, traders should 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.

The immediate support is eyed at 1,571 pts, the low of 14 Jan, followed by 1,557.5 pts, the low of 9 December 2019. Conversely, the immediate resistance is maintained at the 1,600-pt mark, followed by 1,621.5 pts, the high of 9 August 2019,

Source: RHB Securities Research - 21 Jan 2020