Trailing-stop triggered; initiate short positions. The FKLI has broken below the consolidation zone, plummeting 24.5 pts to close at 1,593.5 pts. It opened at 1,620 pts yesterday and failed to gain a foothold during the early session. The index fell to a session low of 1,591 pts and last traded at 1,593.50 pts – forming a Bearish Marubozu pattern. The FKLI was seen settling below the 50-day SMA line, which may open the door for a deeper correction towards the 200- day SMA line, or at least testing the 1,580-pt level. Coupled with the momentum indicator RSI breaching the 50% threshold, the index is undergoing a correction phase now. As such, we shift to a negative trading bias.

After triggering a trailing stop at 1,608 pts, we closed out the long positions we initiated at 1,591 pts, or the closing level of 5 Mar. Conversely, we initiate short positions at the closing level of 23 Mar. To manage risks, a stop loss is placed at 1,615 pts.

The support levels are revised to 24 Feb’s high of 1,584 pts and 3 Mar’s 1,578-pt high. On the upside, the immediate resistance is pegged to 12 Mar’s low of 1,610 pts and followed by 22 Mar’s 1,625-pt high.

Source: RHB Securities Research - 24 Mar 2021