Maintain long positions as the rebound still has legs. The FKLI underwent a profit-taking session. At one point, it came close to testing the immediate support of 1,543 pts with a low of 1,544 pts, before closing 3 pts weaker at 1,553 pts. The soft performance came after the index had a relatively sharp rebound in recent sessions – after it reached a low of 1,518.5 pts on 3 Feb – which saw it testing the immediate resistance of 1,557.5 pts in the prior session. At this juncture, if the immediate support is not breached southwards, the countertrend rebound is still in effect. We maintain our positive trading bias.

As the rebound still has the potential to extend further, we recommend that traders remain in long positions. We initiated these at 1,556 pts, the closing level of 6 Feb. To manage risks, a stop-loss can be placed below 1,543 pts.

Immediate support is set at 1,543 pts, the high of 4 Feb. This is followed by 1,531 pts – derived from 5 Feb’s candle. Meanwhile, the immediate resistance is pegged at 1,557.5 pts – the high of 31 Jan. This is followed by 1,566.5 pts, the low of 24 Jan.

Source: RHB Securities Research - 10 Feb 2020