Maintain long positions. After the recent reversal, the FKLI saw mild profit-taking activities and shed 6.5 pts to close at 1,581.50 pts – above the long-term average line. The index opened lower at 1,587 pts, then oscillated between 1,589.50 pts and 1,578 pts, before closing. It formed a “Bearish Harami” pattern, indicating that prices may reverse to the downside in the immediate term, if the negative momentum follows through in the sessions ahead. Since the index is still solidifying above the 200-day SMA line, it might consolidate sideways before attempting to cross above the 50- day SMA line again. While the stop-loss has yet to be triggered, we are maintaining a positive trading bias.

We recommend that traders stay in long positions. We initiated these at 1,588 pts, which was also the closing level on 7 May. To manage risks, the stop-loss is pegged below 1,569 pts, or 7 May’s low.

The support levels are still at 1,569 pts – which is 7 May’s low – and 1,548.5 pts (6 May’s low). Towards the upside, the resistance levels are unchanged, at 1,592.50 pts – 5 May’s high, then 1,612.5 pts (30 Mar’s high).

Source: RHB Securities Research - 10 May 2021