Maintain short positions. The FKLI continued its bullish momentum for the third day in a row, which saw it climb 7.5 pts to close above the 200-day SMA line yesterday. The index opened lower at 1,567 pts and fluctuated between the day’s high of 1,585.5 pts and low of 1,566 pts in an uptrend movement throughout the session. The index closed at 1,578.5 pts – just 0.5 pts shy of its stop-loss level. The index has a high chance to move in an uptrend movement if it manages to sustain above the 200-day SMA line. The probability will be increased further once the index forms a “higher low” pattern in the coming sessions. Since the index has yet to close above the stop-loss level, we keep to our negative trading bias.

We recommend traders stay in short positions. We initiated these at 1,568.5 pts, which was the closing level of 20 May.

For risk management purposes, the stop-loss is pegged at 20 May’s high of 1,579 pts. The immediate support level is unchanged at 1,569.5 pts, followed by 1,548.5 pts. Towards the upside, the resistance levels are maintained at 1,579 pts – 20 May’s high, and subsequently, 1,592.5 pts, which was 5 May’s high.

Source: RHB Securities Research - 28 May 2021