Maintain short positions. Last Friday, the FKLI jumped 11.5 pts higher before it pared some gains to close at 1,557.50 pts, still 5 pts up to form an inverted hammer candlestick. The index opened higher at 1,555.5 pts, which saw it touch the intraday low of 1,554.5 pts before jumping higher towards the intraday high at 1,564 pts. The index then drifted lower on profit taking to close at 1,557.5 pts. The mild bullish momentum has yet to form a “higher high” pattern despite it managing to form a “higher low”, indicating selling pressure may have eased. However, the RSI trendline is still trending lower, below the 50% threshold – this reaffirms the FKLI’s bearish structure. Unless the index reverses above the 200-day SMA line (1,577 pts), we maintain our negative trading bias.

We suggest that traders stay in short positions. We initiated these at 1,569.50 pts, or the close of 11 Jun. To mitigate risks, we lower our stop-loss at 1,575.50 pts.

The support levels are unchanged at 1,545.50 pts or 21 May’s low, and 1,539.50 pts – the high of Oct 2020. Towards the upside, the resistance levels are set at 1,575.50 pts, or the high of 22 Jun. The next resistance level is set at 1,584.50 pts – the high of 18 Jun.

Source: RHB Securities Research - 28 Jun 2021