Maintain short positions. Despite closing 0.5 pts lower to settle at 1,530 pts, the FKLI managed to find support near the 1,520-pt level, forming a long lower shadow. The index initially opened stronger at 1,533.5 pts to test its intraday high of 1,537 pts before rapidly turning south. It found its footing at the intraday low of 1,522 pts, then rebounded strongly to close near the starting point at 1,530 pts. The latest price actions of the long lower shadow pattern signals a potential technical rebound in the immediate term. Do note that the RSI remains below the trendline, and the bulls are still at their weakest level. Unless the index climbs above the immediate resistance or 1,550 pts – to form a “higher high” pattern – we will remain bearish in our trading bias for now.

Traders should continue to hold short positions. We initiated these at 1,569.50 pts, or the close of 11 Jun. To mitigate risks, the trailing-stop is revised lower at 1,550.00 pts.

The support levels are unchange at 1,520 pts – 29 Jun’s low, and 1,500 pts, which is the psychological level. Towards the upside, the resistance levels are pegged at 1,550.00 pts or 26 Feb’s low, and 1,564.00 pts – the high of 25 Jun.

Source: RHB Securities Research - 6 Jul 2021