Maintain long positions. The FKLI experienced a sharp negative intraday price reversal. After testing the 1,586.5-pt resistance earlier in the session with a high of 1,592.5 pts, the index slid to end at the session’s low of 1,553.5 pts, indicating a 25.5-pt decline. The sharp negative reaction from the said resistance suggests a possible price rejection, which could potentially lead to a deeper price retracement. However, to confirm this, further negative price actions are required in the coming sessions. Pending this, we are keeping our positive trading bias.

For now, we advise traders to stay in long positions. We initiated these at 1,530 pts – the closing level of 2 Jun. To manage risks, a stop-loss can now be set below 1,550 pts.

The immediate support is revised to 1,550 pts – near the 6 Jul’s low, followed by 1,530 pts – near the high of 16 Jun. Moving up, the immediate resistance is now expected at 1,570 pts, the price point of the latest session. This is followed by 1,586.5 pts – 9 Jun’s high.

Source: RHB Securities Research - 7 Jul 2020