Maintain short positions. The FKLI failed to remain above the 200-day SMA line, falling 13 pts to settle at 1,567 pts. It kicked off Monday with a gap-down at 1,573 pts. After barely touching the day’s high of 1,575 pts, the index retraced to the intra-day low of 1,563 pts, before charting a slight rebound towards the close. The downtrend yesterday negated the strong bullish momentum printed last Friday, as the index continued to form another “lower high”. With the RSI indicator moving downwards, the index may be on the brink of breaching below its nearest support level 1,564.50 pts – which it has tested for three consecutive sessions. If this happens, it may retest the 1,545.50-pt May low. Since the momentum is weakening, we stick to our negative trading bias.

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

The support levels remain at 1,564.50 pts, which was 25 May’s low, and 1,545.5 pts – the low of 21 May. Towards the upside, the resistance levels are fixed at 1,584.50 pts which was 18 Jun’s high, followed by 1,591.50 pts, or 8 Jun’s high.

Source: RHB Securities Research - 22 Jun 2021