Maintain long positions. The FKLI pushed away from the multi-session minor congestion area, to register a 18 pts advancement – it closed at 1,647 pts, after testing the immediate resistance of 1,650 pts with a high of 1,654.5 pts. The positive performance is also a follow-through from the index’s breakaway from the “Double Top” formation charted in July. The RSI continued to edge higher, indicating healthy momentum, but did not reach the overbought threshold. Based on recent price actions, we believe that the risk of the FKLI entering a correction phase would be low, if the “Double Top” high of 1,621.5 pts is not breached downwards. We maintain 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 1,621.5 pts.

The immediate support is revised to 1,635 pts – the high of 3 Dec, and followed by 1,621.5 pts, the high of the previous “Double Top” formation in July. Moving up, the immediate resistance target stays at 1,650 pts, followed by 1,665 pts.

Source: RHB Securities Research - 10 Dec 2020