Maintain short positions. The FKLI came under selling pressure yesterday, slipping 5.50 pts to settle at 1,577 pts. The index opened flat at 1,585 pts, and hit the day’s high at 1604.50 pts. After much volatility, the index retraced to touch the day’s low at 1,573.50, before ending the day at 1,577 pts. The index may continue to see volatility as futures contracts are expirying this Friday. Based on the latest session, the index is still capped by risk-off sentiment, registering a bearish candle with a lower low closing. Coupled with the RSI trending below the 50 level, there is an inclination towards the bears, with an expectation of seeing further downside risks. As such, we maintain a negative trading bias.

We recommend traders maintain short positions, initiated at 1,598 pts, or the closing level of 21 Jan. To manage downside risks, a stop-loss can be set above 1,610.50 pts.

The immediate support remains unchanged at 7 Jan’s low of 1,572 pts, followed by 1,563 pts. Towards the upside, the resistance can be found at the physcological level of 1,600 pts, followed by 19 Jan’s closing of 1610.50 pts.

Source: RHB Securities Research - 27 Jan 2021