Maintain long positions. The FKLI recoiled from the 50-day SMA line, adding 23 pts to settle at 1,636.5 pts. Yesterday, the index gapped 2.5 pts higher to open at 1,616 pts. The positive opening lifted the index towards the day’s high of 1,639.5 pts, before retracing slightly to last trade at 1,637 pts. The index has resumed an uptrend after two sessions of consolidation. Amidst strong buying interest, we expect to see the uptrend extend towards the next resistance level of 1,650 pts. Also, the RSI has crossed above the 50% threshold suggesting increased volatility in the immediate term. Premised on this, we maintain our positive trading bias.

We recommend traders 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 immediate support, ie 1,603.5 pts.

The immediate support is kept at 7 Jan’s high of 1,603.5 pts and followed by 30 Nov’s low of 1,573 pts. Towards the upside, the resistance is pegged at 1,650 pts, followed by 29 Dec’s high of 1,655.5 pts.

Source: RHB Securities Research - 14 Jan 2021