Stop loss triggered; initiate long positions. The FKLI breached the resistance in Friday’s session, rising 7.5 pts to settle at 1590.5 pts. The session began on a cautious sentiment, falling 3.5 pts to open at 1,579.5 pts. It faced some selling pressure and found its footing at 1,572.5 pts. After the index reached the day’s low, sentiment turned positive, which saw the index surge gradually to the day’s high of 1,597pts, breaching the resistance level of 1,586 pts. With the resistance level breached, coupled with the RSI heading towards the overbought level, we think that the corrective phase from 11 Nov is over and is poised to test the next immediate resistance level. As such, we switch to a positive trading bias.

Our previous short positions – initiated at 1,560 pts, the closing level of 11 Nov – were closed out in the latest session at 1,586 pts. Concurrently, we initiate long positions. To manage risks, we set a stop loss below 1,560 pts.

The immediate support is at 1,560 pts, followed by the low of 11 Nov, which is 1,545 pts. Towards the upside, the immediate resistance will be the round figure of 1,600 pts, followed by 1621.5 pts, ie the Double Top.

Source: RHB Securities Research - 16 Nov 2020