Maintain short positions. The FKLI’s three consecutive days of bearish momentum saw a pause yesterday after the index inched up 12.5 pts to close at 1,566 pts. The index opened stronger at 1,558.5 pts – it only tapped the day’s low of 1,557 pts after which it swiftly headed north and tapped the day’s high of 1,574 pts, before retracing mildly to close at 1,566 pts and forming a Bullish Harami pattern. Though the latest price action saw the index moving in a positive momentum, it is still premature as it has yet to close above the immediate resistance of 1,569.5 pts. Despite a positive price action on Monday, the index still bounded on a “lower high” bearish pattern, indicating the downward trend is still persisting. Unless the stop loss is breached, or a “higher high” price pattern formed, we maintain our negative trading bias.

We suggest traders to stay in short positions. We initiated these at 1,568.5 pts, which is the closing level of 20 May. To manage risks, the stop-loss is pegged at 20 May’s high of 1,579 pts.

The immediate support level stays at 1,548.5 pts, followed by 1,540 pts. Towards the upside, the resistance levels are maintained at 1,569.5 pts or 17 May’s low, and 1,592.5 pts, or 5 May’s high.

Source: RHB Securities Research - 25 May 2021