Maintain short positions. The FKLI has tested the upside resistance, but the momentum fell short and it closed at 1,650.5 pts. However, the index still managed to add another 9.5 pts from the previous session. Tracking the regional peers’ bullish sentiment, the FKLI opened positive at 1,645 pts but barely traded at the day low of 1,641 pts before rebounding to the day high of 1,659 pts. However, the index retraced during the final trading hour and closed at 1,650.5 pts. Despite the bulls trying to push the FKLI higher, we can see that selling pressure happened at 1,659 pts, which capped the upside potential. The RSI continues to struggle to form a higher high, so we think the momentum will remain neutral in the immediate term. The only bright spot will be the 50-day SMA line – which is trending higher – showing a medium term or higher timeframe for the trend to remain bullish. The index is merely in a minor corrective phase within an overall uptrend. Unless the upside stop-loss is triggered, we are keeping to our negative trading bias.

We recommend traders maintain short positons. We initiated these at 1,665.5 pts, the closing level of 14 Dec. To manage risks, a stop loss can be set above the 1,657.5-pt mark.

The immediate support is marked at 1,635 pts and followed by 1,621.5 pts, ie the high of July’s “Double Top”. Moving up, the immediate resistance is pegged at 23 Dec’s high of 1,654 pts and followed by 1,657.5 pts, or 21 Dec’s high.

Source: RHB Securities Research - 29 Dec 2020