Maintain short positions; stop-loss set lower. The FKLI continued to drop further after falling 4.5 pts to settle at 1,590.5 pts yesterday, touching the immediate support. The index opened at 1,595.5 pts, initially moving higher to touch 1,603 pts high before falling to a low of 1,587.5 pts and ending the session at 1,590.5 pts. It remained below the psychological level of 1,600 pts and 50-day SMA line, which signifies a downward momentum. Coupled with the RSI weakening further below the 50% level, a bearish momentum is expected to follow through and breach the immediate support of 1,588 pts – to be followed by testing the next support at 1,570.5 pts. Since the bears in control, we stick to our negative trading bias, but with a stricter stop-loss to reduce risks.

Traders should stay in short positions. We initiated these at 1,595 pts – 30 Apr’s closed. For risk management purposes, we lower the stop loss to 1,606 pts.

The support level stays at 1,588 pts (8 Apr’s low) and 1,570.5 pts – 6 Apr’s low. Towards the upside, the resistance levels are maintained at 30 Mar’s high of 1,612.5 pts and 1,625 pts, or 26 Apr’s high.

Source: RHB Securities Research - 4 May 2021