Maintain long positions, with a higher stop-loss. The FKLI yesterday was led by strong positive momentum, breaching its immediate resistance to close 9.5 pts stronger and forming a “higher high” pattern above the 50-day SMA line (1,591.9 pts). The index opened weaker at 1,584 pts to touch the day’s low at 1,580 pts before it bounced off in a strong uptrend, reaching the day’s high at 1,599.5 pts and settling at 1,595.5 pts. After establishing a strong support near the 200-day SMA line, the upward movement further strengthened after reclaiming above its 50-day SMA line territory. Premised with the RSI level above 50%, the index is expected to continue its bullish momentum in the medium term. However, we do not discount the possibility of mild profit-taking in the immediate term above the 1,579-pt support level. As long as the stop-loss remains intact, we maintain our positive trading bias.

We recommend traders to maintain long positions. We initiated these at the closing level of 28 May at MYR1,591.50. To mitigate risks, the stop-loss is revised higher at 1,579 pts.

The support levels are revised at 1,592.5 pts, and 1,579.0 pts. Towards the upside, the immediate resistance level is revised at 1,603.0 pts, which was 3 May’s high, followed by 1,612.5 pts, or the high of 15 Apr.

Source: RHB Securities Research - 3 Jun 2021