Maintain short positions. The FKLI displayed a sharp drop yesterday, forming a long black candle or Bearish Marubozu to close 43.5 pts lower at 1,568.50 pts. The index opened lower at 1,609.50 pts before plummeting till the late evening session to touch the day low of 1,564.50 pts. It then bounced off slightly at the end of the session to close at 1,568.50 pts. Based on our previous note, the stop loss was saved yesterday thanks to this plummet while breaching both support levels highlighted earlier. Premised on this, the bears are back in control. Meanwhile, the RSI flipped below the support level and 50% threshold – indicating that the recent bearish momentum has taken charge. As such, we are maintaining a negative trading bias.

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

The support levels are revised to 26 Feb’s low of 1,550 pts and 9 Oct 2020’s 1,539.50-pt high. Towards the upside, the immediate resistance is set at 24 Feb’s high of 1,584 pts and followed by 30 Mar’s 1,612.50-pt high.

Source: RHB Securities Research - 1 Apr 2021