Maintain short positions. The FKLI declined further, after selling pressure picked up below the 200-day SMA line. It shed 9 pts to settle at 1,564.50 pts yesterday. The index opened with a gap-down at 1,569 pts. After hitting the intraday high of 1,572.5 pts, it fell to the day’s low of 1,563.50 pts. The bearish momentum that emerged yesterday solidified the downward movement amid forming a “lower low” bearish price pattern. This, coupled with the RSI indicator trending lower (from 46.30% to 42.81%), indicates that a decline is becoming more imminent. The 200-day SMA line will act as a resistance now, while the bearish momentum remains in place. As such, we maintain a negative trading bias.

We recommend that traders stick to short positions. We initiated these at the close of 11 Jun, at 1,569.50 pts. To manage risks, the stop-loss is pegged above 1,592 pts.

The immediate support level remains at 1,564.50 pts, which was 25 May’s low, then 1,545.5 pts, the low of 21 May. Towards the upside, the resistance levels are unchanged at 1,591.5 pts, or 8 Jun’s high, and 1,599.5 pts, which is 2 Jun’s high.

Source: RHB Securities Research - 17 Jun 2021