Maintain long positions. Selling pressure eased yesterday, and the FKLI rebounded by 4.00 pts to close at 1,615 pts. Yesterday, the index gapped up to open at 1,616.50 pts, then hit the day’s high of 1,620 pts before drifting lower towards the day’s low of 1,610.50 pts. During the final trading hour, mild bullish interest lifted the index slightly. Selling pressure – which began last Friday – was not present yesterday. We view this as a positive sign that the index may move in a range-bound pattern, or consolidate between 1,619 pts and 1,602 pts. Since it is trading above the 50-day SMA line, the overall trend is bullish and the uptrend may return after the consolidation phase is completed. As such, we maintain a positive trading bias.

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

The support levels remain unchanged 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 - 16 Mar 2021