Maintain short positions. The FKLI fell lower yesterday, but managed to bounced off to pare the losses – it closed 4.5 pts higher at 1,546.5 pts. The index initially opened lower at 1,538 pts then fell towards the intraday low of 1,520.5 pts – it tested the 1,520-pt support level before bouncing off strongly to tap its intraday high at 1,553 pts. It then moved sideways and retraced slightly to close at 1,546.5 pts. This bullish price action suggests an interim base may have formed near the support level of 1,520 pts. However, since the RSI trendline remains below the 40% level, this shows the bears remain in control. The FKLI needs to break above the resistance or, at least, form a “higher high” pattern to see a trend change. At this juncture, the downtrend remains intact and we maintain our negative trading bias.

We recommend traders maintain short positions. We initiated these at 1,569.50 pts, or the close of 11 Jun. To mitigate risks, the stop-loss threshold is placed at 1,575.50 pts.

The support levels are set at 1,538.00 pts – 28 Jun’s low – and followed by 1,520 pts. Towards the upside, the resistance levels are unchanged at 1,564.00 pts – the high of 25 Jun – and 1,575.50 pts, ie the high of 22 Jun.

Source: RHB Securities Research - 30 Jun 2021