Maintain long positions. The FKLI bounced off its immediate support last Friday, rebounding 5.5 pts to settle at 1,516.50 pts. On Friday, the index started on a stronger note, gapping higher to open at MYR1,515.50 pts. Underpinning the bullish sentiment, the index rose higher to test the 1,522-pt intraday high. Profit taking activties in the afternoon session brought it lower to touch the 1,513.50-pt day low before close at 1,516.50 pts – it printed a long upper shadow. Despite the candlestick pattern suggesting a positive sentiment, the momentum is still not strong enough to lift the index higher. If it broke below the 1,510-pt immediate support, it may undergo a consolidation towards the 1,493-pt level. On the other hand, breaching above the 1,527.50-pt resistance will attract more buying pressure and lift the index higher. At this juncture, since the stop-loss remains intact, we stick to our positive trading bias.

Traders are advised to retain long positions initiated at 1,524 pts, or the close of 17 Aug. For risk management, the initial stop-loss is placed at 1,493 pts.

The immediate support is kept at 1,510 pts, the low of 28 Jul, followed by 1,493 pts, or the low of 11 Aug. Meanwhile, the nearest resistance is revised to 1,527.50 pts – the high of 17 Aug, then the higher resistance of 1,550 pts.

Source: RHB Securities Research - 23 Aug 2021