Maintain long positions. Although it failed to retain a large portion of intraday gains yesterday, the FKLI closed 15 pts higher at 1,453.5 pts. It also tested the immediate resistance of 1,454 pts, with a high of 1,461.5 pts. The latest session’s price action around this resistance was not enough to indicate that a price rejection has happened. As such, we still believe the rebound – which began over two months ago – remains in place. Also, the RSI reading is still below the overbought threshold. If the immediate support of 1,427.5-pt is not breached, the risk of a retracement being triggered is still contained.

We advise that traders 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 below 1,427.5 pts.

We revised the immediate support to 1,427.5 pts, the low of 22 May, followed by 1,415 pts, the high of 18 May. Moving up, the immediate resistance is still pegged at 1,454 pts – the high of 9 Mar, followed by 1,466.5 pts – the “Downside Gap” of 6 Mar.

Source: RHB Securities Research - 27 May 2020