Stop-loss triggered; initiate short positions. The FKLI underwent strong negative pressure last Friday, and closed 18.0 pts lower – below the 200-day SMA line (1,576 pts) – at 1,572.5 pts. The index opened with a gap-down at 1,587 pts to tap the day’s high at 1,587.5 pts, before it shifted downwards to print the day’s low at 1,571 pts. Thereafter, it inched up towards a close. The index fell below its long-term average line, forming a “lower low” pattern in the latest session. This, on top of the RSI turning bearish as it trended below the 50% threshold, leads us to expect the medium term trend to be bearish. Since the stop-loss has been triggered, we switch to a negative trading bias.

We closed out the long positions, which were initiated at the closing level of 28 May at 1,591.50, after triggering the stop-loss of 1,579 pts. Conversely, we initiate short positions at the closing level of 4 May, or 1,572.50 pts. To mitigate risks, the stop-loss can be placed above 4 Jun’s high of 1,587.5 pts.

The first two support levels are lowered to 1,570.0 pts, and 1,545.5 pts (the low of 21 May). Towards the upside, the immediate resistance level is also revised downwards to 1,587.5 pts, followed by 1,599.5 pts which is 2 Jun’s high.

Source: RHB Securities Research - 8 Jun 2021