Maintain long positions as rebound has not peaked. The FKLI experienced a relatively strong session – it closed marginally above the 50-day SMA line at 1,407.5 pts, adding 25.5 pts. At one point, it reached a high of 1,412.5 pts. The closing level also placed the index above the previous 1,400-pt resistance. With the encouraging price action near the said SMA line, this implies the multi-week counter-trend rebound that started from the low of 1,171 pts on 17 Mar is still developing. Recall that this rebound set in after the index experienced a sharp multi-month decline which witnessed the multi-year support level of 1,500 pts being breached at end-February. Maintain our positive trading bias.

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 1,380 pts.

The immediate support is revised to 1,380, price point of the latest session. This is followed by 1,360 pts, price point of 14 Apr. Conversely, the immediate resistance now eyed followed by 1,415 pts – a level slightly above the 50-day SMA line, followed by 1,440 pts – the high of 11 Mar.

Source: RHB Securities Research - 20 Apr 2020