Maintained short positions. The FKLI bounced off the 50-day SMA line yesterday, closing 3.5 pts higher at 1,603.50 pts. Yesterday, it opened at 1,603 pts before falling to the day’s low of 1,593 pts. Buying interest emerged near the 50- day SMA line, and the index recouped earlier losses, then rebounded to the day’s high of 1,604.50 pts. The index has been testing the 50-day SMA line over several attempts. As long as the index can remain above the moving average, there is a possibility it may rise further to test the immediate resistance levels of 1,610 pts and 1,625 pts. The RSI just crossed above the 50% threshold, suggesting that bulls are picking up pace. The FKLI needs to at least breach the immediate resistance to trigger a “higher high” pattern. However, since the stop-loss remains intact, we are maintaining a negative trading bias.

We recommend that traders stick to short positions, 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 at 12 Mar’s low of 1,610 pts, followed by 22 Mar’s 1,625-pt high.

Source: RHB Securities Research - 30 Mar 2021