Maintain long positions as the bulls are attempting to cross the immediate resistance. The FKLI continued to show a good progress in extending its counter-trend rebound in the latest session, as it settled at the immediate resistance of 1,380 pts, indicating a gain of 8 pts. We believe the rebound has set in to correct the index’s previous multi-month retracement, which reached a low of 1,171 pts on 17 Mar. Towards the upside, price actions in the coming sessions around the 1,400-1415-pt level is critical in signalling the index’s next directional bias, as the level coincides with the declining 50-day SMA line and the 12 Mar’s “Downside Gap” – a price rejection could potentially mark an interim top for the said rebound phase. For now, keep to our positive trading bias.

As the bulls have managed to extend the rebound, we recommend traders to stay in long positions. We initiated these at 1,330.5 pts, the closing level of 6 Apr. To manage risks, a stop-loss can be placed below 1,360 pts.

The immediate support is maintained at 1,360 pts, price point of 14 Apr. This is followed by 1,345 pts, the price point of 7 Apr. Towards the upside, the resistance points are pegged at 1,380 pts, followed by 1,400 pts.

Source: RHB Securities Research - 16 Apr 2020