Maintain short positions. The FKLI rose 12 pts to settle at 1,576 pts yesterday. It gapped up at the opening, at 1,569 pts, before dropping to the day’s low of 1,559 pts. After hitting the low in the early part of the session, bulls took the driver’s seat and lifted the index towards the day’s high of 1,578 pts. The FKLI has bounced off the 200-day SMA line, attempting to challenge the resistance level of 1,589 pts. As previously mentioned, if the index crosses the resistance, we may see a new “higher high” pattern – an early indication that the downtrend is changing its course. Meanwhile, failure to sustain above 1,550 pts or a breach of the 200-day SMA line would lead to the extension of the downtrend. As the RSI still hovering below the 50% threshold, chances are slim that the index will push past the resistance. As such, we are keeping our negative trading bias.

We recommend that traders stick to short positions – which were initiated at 1,565 pts, or the closing level of 1 Mar. To manage risks, a stop-loss can be placed above 25 Feb’s high of 1,589 pts.

The support levels are marked at 1,550 pts, followed by 1,538 pts. Towards the upside, the resistance levels are pegged at 1,589 pts, followed by 1,600 pts.

Source: RHB Securities Research - 4 Mar 2021