Maintain long positions while keeping the trailing-stop. The FKLI experienced a sharp intraday negative price reversal as it failed to hold on to its earlier session’s positive tone. At one point, it tested the 1,600-pt immediate resistance mark with a high of 1,600.5 pts, before sliding lower to settle 12.5 pts weaker at 1,578 pts. The negative performance nullified the prior three sessions’ price actions, which showed the index hovering around the 50-day SMA line. Should there be further negative price actions in the coming sessions with a downside breach of the 1,571-pt support level, chances are high that the index’s multi-month countertrend rebound may reach an end. For now, we stick to our positive trading bias.

Pending confirmation for an end to the said countertrend rebound, 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 expected at 1,577 pts, the lows of 15 and 16 Jan, followed by 1,571 pts, the low of 14 Jan. Moving up, the immediate resistance is maintained 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 - 23 Jan 2020