Maintain long positions. The FKLI saw a minor pullback on Monday, retracing 13 pts to settle at 1,617.5 pts. Following last Friday the upthrust, the index opened weakly, gapping 3.5 pts lower at 1,627 pts. The index tested the day’s high of 1,628.5 pts before retracing to a low of 1,609.5 pts. During the session’s final quarter, buying interest lifted the index to end the day at 1,617.5 pts. Despite the pullback, the index managed to stay above the 50-day SMA line. Hence, the new uptrend that started on last Friday is deemed as intact. The RSI crossed above the downtrend line, showing a possiblity that the momentum has changed its course. A break above the 50% threshold in the coming sessions will see further positive momentum. The index seems to be taking a breather after last Friday’s rally – as long as it is trading above the 50-day SMA line or stop-loss level, we maintain a positive trading bias.

We recommend traders to maintain long positions. We initiated these at 1,630.5 pts, or the closing level of 8 Jan. To manage downside risks, a stop-loss can be set below the nearest support, ie 1,603.5 pts.

The immediate support is marked at 7 Jan’s high of 1,603.5 pts, followed by 30 Nov’s low of 1,573 pts. Towards the upside, the resistance is pegged at 3 Dec’s high of 1,635 pts, followed by 29 Dec’s high of 1,655.5 pts.

Source: RHB Securities Research - 11 Jan 2021