Maintain long positions. The FKLI’s recent strong rally led to profit-taking activities, and it closed 7.5 points lower yesterday. The negative sentiment on the first trading day of the week saw it gapping downwards at the open, at 1,580 pts. It then touched the day’s low of 1,571 pts, before rebounding towards the day’s high of 1,589 pts, then closed at 1,584 pts. As mentioned in an earlier note, the index should still be trending north, if it stays above the 200-day SMA line. The mild profit-taking activity is expected to be short-lived, as the index is still trading above the long-term average line – bouncing off with a long lower shadow. A bullish movement in the next session should bring about a “higher low” pattern, which will eventually solidify the uptrend. As such, we remain firmly set on a positive trading bias.

We suggest that traders stay in long positions. We initiated these at the closing level of 28 May at MYR1,591.50. To manage risks, the initial stop-loss is placed below 1,569 pts.

The immediate support level stays at 1,579 pts, then 1,569.5 pts. Towards the upside, the resistance levels are unchanged at 1,592.5 pts, which was 5 May’s high, followed by 1,603.0 pts, or the high of 3 May

Source: RHB Securities Research - 1 Jun 2021