Maintain long positions while placing the trailing-stop at the breakeven level. The FKLI’s positive momentum continued to play out in the latest session, with the index settling 17.5 pts stronger at 1,748.5 pts and crossing above the previous immediate resistance of 1,440 pts. The performance is a follow-through from the prior session’s breakaway from the 1,425.5 pts – indicating the bulls have a firm control over the index’s rebound. The RSI reading has yet to signal an overbought condition, implying there is room for potential upside. Additionally, the index is now trading firmly above the 50-day SMA line. 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 now be placed at the breakeven level.

The immediate support is revised to 1,425 pts, the high of 20 Apr, this is followed by 1,415 pts, the high of 18 May. Meanwhile, the immediate resistance is pegged at 1,454 pts – the high of 9 Mar, followed by 1,466.5 pts – “Downside Gap” of 6 Mar.

Source: RHB Securities Research - 22 May 2020