Maintain long positions. Following recent profit-taking activities, the FKLI gapped down yesterday to close 3 pts softer at 1,578.50 pts – barely above the 200-day SMA line. The index had initially gapped down to open at 1,574 pts, and drifted to the low of 1,569.50 pts before it whipsawed to touch the intraday high of 1,580 pts prior to closing. Despite a gap down during the earlier session, it managed to find its footing near the 1,569-pt support level, and staged a mild rebound. If the rebound extends, the index may retest the resistance level near the Bearish Harami. Meanwhile, a dip below 1,569 pts may see sentiment become risk-off, and the index will revert to correction mode. As the stop-loss stayed intact yesterday, we stick to our positive trading bias.

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

The support levels are unchanged at 1,569 pts – 7 May’s low – and 1,548.5 pts, or 6 May’s low. Towards the upside, the resistance levels stay at 1,592.50 pts or 5 May’s high, and 1,612.5 pts, which was 30 Mar’s high.

Source: RHB Securities Research - 12 May 2021