Maintain short positions. The FKLI failed to move above the 50-day SMA line as it slipped 7.5 pts to close at 1,576.50 pts yesterday. The index had a weak opening at 1,583 pts. It fell towards the day’s low of 1,575 pts, before meandering around the bottom until the end of the session. The negative momentum yesterday reversed the previous day’s direction, and triggered a “lower high” price pattern, which was formed just beneath the 50-day SMA line. This signifies that the downtrend is in progress. If the index remains below the average line, the downtrending of the 50-day SMA line may see selling pressure accelerate and drag it lower towards the next support level of 1,564.50 pts, followed by 1545.50 pts. As such, we make no change to our negative trading bias.

We suggest that traders remain in short positions. We initiated these at the close of 11 Jun, at 1,569.50 pts. To mitigate risks, the stop-loss is set above 1,592 pts.

The support levels are maintained at 1,564.50 pts (25 May’s low), then 1,545.5 pts, which was the low of 21 May. Towards the upside, the immediate resistance level remains at 1,591.5 pts (the high of 8 Jun), followed by 2 Jun’s high of 1,599.5 pts.

Source: RHB Securities Research - 16 Jun 2021