Maintain long positions. The FKLI saw mild profit taking yesterday, retracing 8.50 pts to settle at 1,603.50 pts – staying above the 1,600-pt level. The index started the session at 1,611 pts, where it immediately slipped towards its day’s low at 1,601 pts. Before the session closed, the index rebounded mildly to settle at 1,603.50 pts. Although profittaking activities signal the recent upward movement may have reached an interim peak, the RSI indicator – still above the 50% level – suggests that the bullish momentum may persist in the coming session. If the momentum picks up again, the index may cross the immediate resistance of 1,612.50 pts to form a “higher high” bullish pattern. Meanwhile, if profit taking is extended, the index may retest the 50-day SMA line or the support level at 1,588 pts. As long as the correction is mild and stays above the stop loss level, we continue to maintain our bullish trading bias.

We recommend that traders maintain long positions, which were initiated at 1,596 pts, or the closing level of 7 Apr. To manage risks, the stop loss is set below 1,588 pts.

The immediate support level stays at 1,588 pts, followed by 6 Apr’s low of 1,570.50 pts. Towards the upside, the immediate resistance is maintained at 30 Mar’s high of 1,612.5 pts and, subsequently, 1,625 pts.

Source: RHB Securities Research - 13 Apr 2021