Maintain short positions. The FKLI fell below the previous support level, dropping 12.5 pts to close at 1,552.5 pts yesterday – forming a long black candlestick. Despite opening higher at 1,566.5 pts, the index drifted lower shortly and then bears took control throughout the session. It hit the intra-day low of 1,551 pts just before the closing. The strong negative momentum led to another “lower low” pattern – firming up the anticipated downtrend in sessions ahead. This, together with the RSI momentum decelerating further to slightly below 40%, indicates that the FKLI may decline to the next support level of 1,545.50 pts. As such, we stick to our negative trading bias.

We recommend that traders remain in short positions. We initiated these at 1,569.50 pts, or the close of 11 Jun. To mitigate risks, we revise our stop-loss downwards to 1,574 pts (from 1,592 pts).

The support levels are lowered to 1,545.50 pts, the low of 21 May, and 1,539.50 pts or Oct 2020’s high. Towards the upside, the immediate resistance level pegged at 1,566.50 pts, or 24 Jun’s high. The next resistance level is at 1,575.50 pts, or the high of 22 Jun.

Source: RHB Securities Research - 25 Jun 2021