Maintained short positions. Following the Bearish Marubozu on 23 Mar, the FKLI moved sideways for three consecutive days. Last Friday, it closed at the psychological level of 1,600 pts. It opened at 1,600 pts before falling sharply to the day’s low of 1,588.5 pts early in the session. After reaching the day’s low, the index bounced back towards its opening price to end above the 50-day SMA line. The Doji price action – pointing to a neutral direction – indicates that the bears are taking a breather. If it fails to stay above the psychological level of 1,600 pts, we may see the return of bearish momentum where the index may retest the lower support of 1,584 pts. On the other hand, breaching the 1,615-pt level may see the formation of a “higher high”, and challenge the Bearish Marubozu candle. Before that happens, we maintain a negative trading bias.

We recommend that traders remain in 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 are still 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 - 29 Mar 2021