Initiate long positions as a rebound signal has appeared. The FKLI ended the latest session strongly as it added 94 pts to close at 1,305.5 pts – this was above the previous resistance points of 1,235 pts and 1,250 pts. Intraday, the tone was also encouraging as it generally trended higher for the whole session, with the low and high posted at 1,212 pts and 1,306.5 pts. The strong session has, in our view, signalled that the index is entering a countertrend rebound phase. This is meant to correct its recent sharp retracement phase, which reached an oversold RSI reading. Premised on this, we switch our trading bias to positive.

Our previous short positions initiated at 1,548.5 pts, the closing level of 12 Feb, were closed out at the 1,274.5-pt level. On the expectation that a countertrend rebound is developing, we initiate long positions at the latest closing. For risks management purposes, a stop-loss can be placed below the 1,265-pt level.

The immediate support is revised to 1,285 pts, this is followed by 1,265 pts – both are derived from the latest candle. Moving up, the immediate resistance is now pegged at 1,310 pts, the high of 16 Mar. This is followed by 1,330 pts, the price point of 13 Mar.

Source: RHB Securities Research - 23 Mar 2020