Initiate long positions as the bulls are signalling rebound extension. The FKLI ended the latest session 17 pts stronger at 1,330.5 pts, marginally above the previous immediate resistance of 1,330 pts. The positive performance invalidated our previous expectation for the index to resume its multi-month downtrend – the counter-trend rebound that started from the low of 1,171 pts on 17 Mar is still developing. The rebound phase is taking place after the said multi-month retracement reached an oversold RSI reading. Based on the latest technical picture, the rebound could extend towards the 1,350-pt to 1,368-pt resistance zone. Hence, we switch our trading bias to positive.

Our previous short positions initiated at 1,309.5 pts, the closing level of 1 Apr, were closed out at 1,330 pts. As the said rebound is now showing signs of extending, we initiate long positions at the latest closing. To manage risk, a stop-loss can be placed below 1,295 pts.

The immediate support is revised to 1,320 pts, derived from the latest session. This is followed by 1,295 pts, near the low of 30 Mar. Moving up, the immediate resistance is eyed at 1,350 pts, followed by 1,368 pts – the high of 13 Mar.

Source: RHB Securities Research - 7 Apr 2020