Maintain long positions. Last Friday, the FKLI bucked the trend of five consecutive positive sessions, and shed 15.50 pts to settle at 1,611 pts. It gapped up to open at 1,630.50 pts. Initially, the index rose to the day’s high of 1,634.50 pts, but bears dragged it towards the low of 1,610 pts in the second half of the session. It closed at 1,611 pts. The benchmark index is due for a healthy pull-back towards the 50-day SMA line, or 1,602 pts. A breach below 1,589 pts should lead to a deeper correction towards the 200-day SMA line. As long as it stays above the 50-day and 200- day SMA lines, the uptrend structure should be intact. We expect the uptrend to be resumed, after the minor correction is over. Until the stop-loss is breach, we make no change to our positive trading bias.

We recommend that traders maintain long positions, which were initiated at 1,591 pts, or the closing level of 5 Mar. To manage risks, a stop-loss is set at 1,589 pts.

The support levels are maintained at 1,602 pts, followed by 25 Feb’s 1,589-pt high. Towards the upside, the resistance levels are at 9 Mar’s high of 1,619 pts and 12 Mar’s high of 1,634.50 pts.

Source: RHB Securities Research - 15 Mar 2021