Maintain long positions. The FKLI’s positive momentum last Tuesday was pared down by strong downward momentum yesterday, which saw the index close 12 pts lower at 1,578.0 pts – near the 200-day SMA line (1,576 pts). The index opened at 1,590.5 pts and immediately fall towards the day’s low at 1,575 pts only to bounce off mildly to close at 1,578.0 pts. The index moved further away from the 50-day SMA line and maintained near its long term average line yesterday, which reduced the chances of a positive momentum in the immediate term and may move sideways between the 50-day and 200-day SMA line range. Besides, the positive RSI earlier has dipped below the 50% level, leading us to expect the medium-term trend to be weak before a positive momentum kicks in later. However, since the stop-loss remains intact, we stick to our positive trading bias.

We recommend traders to stay in long positions. We initiated these at the closing level of 8 Jun, or 1,590 pts. To mitigate risks, the stop-loss is set below 31 May’s low of 1,570 pts.

The support levels are revised lower to 1,570 pts, or the low of 31 May’s low, and 1,545.5 pts (the low of 21 May). Towards the upside, the immediate resistance level is revised to 1,591.5 pts, followed by 1,599.5 pts, ie 2 Jun’s high.

Source: RHB Securities Research - 10 Jun 2021