Maintain long positions on a possible rebound extension. The FKLI closed 9.5 pts higher yesterday, at 1,431 pts. It breached the previous immediate resistance of 1,425.5 pts, which was the high of the 21 Apr’s “Shooting Star” formation. The latest performance suggests that the index’s upward move, following the multiple re-tests of the 50-day SMA line in mid-March and mid-April, is being extended. This positive bias is also supported by the RSI, which continues to trend higher, indicating a good momentum. We maintain our positive trading bias.

We advise traders to stay in long positions. We initiated these at 1,421.5 pts, the closing level of 19 May. To manage risks, a stop-loss can be placed below 1,400 pts.

The immediate support is revised to 1,415 pts, the high of 18 May. This is followed by the 1,400-pt level. Conversely, the immediate resistance now set at 1,440 pts, the high of 11 Mar, followed by 1,454 pts – the high of 9 Mar.

Source: RHB Securities Research - 21 May 2020