Maintain short positions. The FKLI continued to trend lower, declining 14 pts to settle at 1,582.50 pts. On the first trading session of the week, it opened flat at 1,596.50 pts. During the early morning, the index rebounded to test the day’s high of 1,603 pts. Shortly after that, sentiment became risk-off and saw selling pressure drag the index towards the day’s low of 1,573 pts – it last traded at 1,582.50 pts. Since the bearish pattern Shooting Star appeared on 14 Jan, the index has been moving lower in a downtrend channel. To see a change of trend, the index needs to record a new higher high, or breach the resistance marked at 1,610.50 pts. Meanwhie, if the index breaks down the support level marked at 1,572 pts, the FKLI will see a higher downside risk. With the RSI trending below the 50 level, we think the momentum will likely to be weak in the immediate term. Premised on this, we maintain a negative trading bias.

We recommend traders to maintain short positions. Our short positions were initiated at 1,598 pts, or the closing level of 21 Jan. To manage downside risks, a stop-loss is adjust to 1,610.50 pts.

The immediate support is marked at 7 Jan’s low of 1,572 pts, followed by 1,563 pts. Towards the upside, the resistance is pegged at the physcological level of 1,600 pts, followed by 19 Jan’s closing of 1610.50 pts.

Source: RHB Securities Research - 26 Jan 2021