Maintain short positions. Following a sell-off on Tuesday, the FKLI rebounded from the 50-day SMA line, and rose 10.5 pts to close at 1,604 pts. It opened at 1,594.50 pts yesterday and fell to the session low of 1,584.50 pts. In the afternoon, buying interest emerged and the index recouped earlier losses – forming a long lower shadow pattern. The positive price actions indicate that buyers are not giving up yet, and are trying to form a base near the 50-day SMA line. Since it managed to climb above the psychological level of 1,600 pts, we may see mild bullish momentum retesting the resistance of 1,610 pts. Despite a strong rebound yesterday, the Bearish Marubozu candle remains intact, and the index has yet to exhibit a “higher high” pattern. As such, we maintain a negative trading bias.

We recommend that traders shift to short positions, which were initiated at 1,593.50 pts or the close of 23 Mar. To manage risks, a stop-loss is set at 1,615 pts.

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

Source: RHB Securities Research - 24 Mar 2021