Stop loss triggered; initiate long positions. The FKLI saw a long white candle, or Bullish Marubozu, yesterday – surging 20.5 pts to settle at 1,596 pts. The index opened with a gap up at 1,578 pts, climbing up to touch the 1,597.5-pt high before taking a breather to conclude the session at 1,596 pts – piercing above the 50-day SMA line. The latest price action showed the bulls overpowering the bears by forming a Bullish Marubozu candlestick pattern. Coupled with the RSI crossing above the 50% threshold, the FKLI is shifting to a bullish momentum. It is very likely the renewed bullish momentum may follow through to test the resistance pegged at 1,612.50 pts or, at least, reclaim the 1,600-pt psychological level. Since the stop loss is breached, we are shifting to a positive trading bias.

We closed out the short positions that were initiated at 1,593.5 pts, or the closing level of 23 Mar, after triggering the 1,590-pt stop-loss. Conversely, we initiate long positions at the closing level of 7 Apr. To manage risks, the initial stoploss can be placed below 1,570 pts.

The immediate support level is revised to 1,580 pts and followed by 6 Apr’s low of 1,570.50 pts. Towards the upside, the immediate resistance is now pegged at 30 Mar’s high of 1,612.5 pts, followed by the higher hurdle of 1,625 pts.

Source: RHB Securities Research - 8 Apr 2021