Maintain short positions. The FKLI retraced downwards yesterday, losing 7.5 pts to settle at 1,575.5 pts. The index opened at 1,586.5 pts and touched a 1,587.5-pt high before falling to the day’s low of 1,570.5 pts during the early part of the session. It then rebounded mildly to settle at 1,575.5 pts – still below the 50-day SMA line. The “lower high” price action suggests that selling pressure could persist, and that there is high probability of downside risks. As the RSI indicator is pointing downwards – below its resistance and the 50% threshold – the bearish sign is crystalising. Therefore, we maintain a negative trading bias.

We suggest traders maintain the short positions initiated at 1,593.5 pts, or the close of 23 Mar. To manage risks, the stop-loss is placed at 1,590 pts.

The immediate support level remains at 26 Feb’s low of 1,550 pts, followed by 9 Oct 2020’s high of 1,539.5 pts. Towards the north, the immediate resistance is pegged at 5 Apr’s high of 1,589.50, followed by 30 Mar’s 1,612.5-pt high.

Source: RHB Securities Research - 7 Apr 2021