Maintain long positions. The FKLI’s positive momentum yesterday cancelled the weakness recorded on Wednesday. It closed 9 pts higher, at 1,604 pts – reclaiming a spot above the 50-day SMA line. The index opened with a positive momentum, gapping up to 1,598 pts. Then, it grazed the low of 1,597 pts, before heading north to touch the day’s high of 1,608.5 pts. The positive momentum eventually strengthened the RSI, which bounced above the 50% threshold – this waters down the possibility of a further correction, which we discussed in a previous note. If this momentum continues, the index may gradually move towards the immediate resistance of 1,588 pts. As such, we hold on to our positive trading bias.

We recommend that traders stay in long positions. We initiated these at 1,596 pts, or the closing level of 7 Apr. To manage risks, a stop-loss is placed below 1,588 pts.

The immediate support remains at 1,588 pts, followed by 6 Apr’s low of 1,570.50 pts. Towards the upside, the immediate resistance level is fixed at 30 Mar’s high of 1,612.50 pts, followed by 1,625 pts – 30 Mar’s high.

Source: RHB Securities Research - 23 Apr 2021