Stop-loss triggered; initiate long positions. The FKLI’s strong downward pressure recently was negated by a strong positive momentum yesterday that saw the index surging 17.5 pts to close at 1,590 pts – above the 200-day SMA line. The index opened with a gap-up at 1,576 pts to tap the day’s low at 1,575.5 pts, before it moved strongly to print the day’s high at 1,591.5 pts and mildly retraced to close at 1,590 pts. The index reclaimed above its long-term average line, forming a “higher low” pattern in the latest session. This, on top of the RSI turning bullish again as it crossed above the 50% threshold, leads us to expect the medium-term trend to be bullish again. Since the stop-loss has been triggered, we switch from negative to a positive trading bias.

We closed out the short positions, which were initiated at the closing level of 4 June, or 1,572.50 pts, after triggering the stop-loss of 1,587.5. Conversely, we initiate long positions at the closing level of 8 Jun, or 1,590 pts. To mitigate risks, the stop-loss can be placed below 31 May’s low of 1,570 pts.

The first two support levels are revised higher to 1,580 pts, or the low of 2 Jun, and 1,570 pts (the low of 31 May). Towards the upside, the immediate resistance level is revised to 1,599.5 pts, followed by 1,612.5 pts, ie 16 Apr’s high.

Source: RHB Securities Research - 9 Jun 2021