Stop-loss triggered; initiate short positions. The FKLI failed to sustain above the 200-day SMA line for two consecutive days after it fell 4 pts, breaching its immediate support and stop-loss levels yesterday. The index opened weaker at 1,574.5 pts to oscillate between the day’s high of 1,579 pts and the day’s low of 1,564.5 pts before closing lower at 1,568.5 pts. The mild decline below the previous support line yesterday signifies the bearish momentum has emerged. If the negative momentum follows through, it may test 31 Mar’s low of 1,560 pts, followed by 1,548.50, which is the low of 2021. Since the stop loss has been breached, we are shifting over to a negative trading bias.

We closed out the long positions, which were intitated at 1,588 pts, which was also the closing level of 7 May, after triggering the stop-loss at 1,569 pts, or 7 May’s low. Conversely, we initiate short positions at the closing level of 20 May. To manage risks, a stop-loss can be placed above 5 May’s high of 1,592.50 pts.

The immeidate support level is revised at 1,560 pts, followed by 1,548.5 pts. Towards the upside, the resistance levels are unchanged at 1,592.50 pts – 5 May’s high, and 1,612.5 pts, or 30 Mar’s high.

Source: RHB Securities Research - 21 May 2021