Maintain long positions. The FKLI swung from an intraday low of 1,585.5 pts to briefly test the 1,600-pt immediate resistance with a high of 1,606 pts, before closing 7 pts higher at 1,598.5 pts. The encouraging performance is in line with our expectation that the index was near to, if not already, completing its 2-week sideways trading pattern in the prior session. Hence, the possibility is high that the index is on the path of extending its upward move in the coming sessions – with a good likelihood for it to cross above July’s “Double Top” formation high of 1,621.5 pts. Towards the downside, this bias would be negated should the 1,572.5 pts support level fail to hold.

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 to 1,590 pts, followed by 1,572,5 pts. Conversely, the immediate resistance is maintained at 1,600 pts, followed by the “Double Top” high of 1,621.5 pts.

Source: RHB Securities Research - 2 Dec 2020