Maintain long positions. The FKLI extended its minor pause for a second consecutive session and, in the process, retested the immediate support of 1,621.5 pts with a low of 1,618.5 pts. It later closed 2 pts lower, at 1,622 pts. The latest two sessions’ negative performance was not aggressive. This, together with the still-strong support level, compels us to think that a minor pause is taking place (and not the start of a trend reversal), following the index’s sharp gain last Thursday. Further supporting this positive bias is the fact that both the 50- and 200-day SMA lines are still edging higher, on top of the healthy RSI reading. We make no change to our positive trading bias.

We recommend that traders remain in long positions. We initiated these at 1,611.5 pts, the closing level of 26 Nov. To manage risks, a stop-loss can be set below 1,615 pts.

We are keeping the immediate support target at 1,621.5 pts, which is the high of the previous “Double Top” formation in July. This is followed by 1,600 pts. Moving up, the immediate resistance is expected at 1,650 pts, followed by 1,665 pts.

Source: RHB Securities Research - 8 Dec 2020