Tightening up trailing-stop further; maintain long positions. The FKLI continued to extend its recent sessions’ sharp upward move, adding 14.5 pts to close at 1,558 pts, crossing above the previous immediate resistance of 1,545.5 pts. The closing level effectively pushed the index to trade in a new resistance zone of 1,545.5 pts and 1,622.5 pts ie the trading range between Oct-2019 and Dec-2019. This came on the back of an overbought RSI reading. Although we believe the recent sessions’ upward moves have turned unhealthy, in the absence of a price reversal signal, the rebound that started from the low in March is still considered in place.

Without a price exhaustion signal to mark an interim top for the rally, traders should 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 below 1,530 pts.

We revise the immediate support to 1,540 pts, price point of the latest session. This is followed 1,530-pt mark – derived from 3 Jun’s candle. Overhead resistance is now eyed at 1,560.5 pts, the high of 11 Feb. This is followed by 1,566.5 pts – derived from 24 Jan’s “Downside Gap”.

Source: RHB Securities Research - 4 Jun 2020