Maintain long positions. The FKLI shed 18 pts to close at 1,583 pts yesterday, failing to maintain the earlier session’s positive performance where it reached a high of 1,616 pts. Broadly, the weak performance can be regarded as part of the index’s 2-week sideways trading pattern, which is developing below the high of July’s “Double Top” formation, ie 1,621.5 pts. If our thesis fleshes out, the correction phase should be near – if not already at – its end. This implies that the FKLI is likely to resume its upward move to test the “Double Top” formation in the coming sessions. This bias should stay valid, provided the 1,572.5-pt level is not breached.

We recommend that traders remain in long positions. We initiated these at 1,611.5 pts, or the closing level of 26 Nov. To manage risks, a stop-loss can be set below 1,572,5 pts.

The immediate support is revised downwards slightly to 1,572,5 pts, followed by 1,560 pts. Conversely, the immediate resistance is now at 1,600 pts, followed by the “Double Top” high of of 1,621.5 pts.

Source: RHB Securities Research - 30 Nov 2020