Maintain short positions. Amid the recent pullback, the FKLI rebounded strongly in its attempt to breach the immediate resistance (also the trailing stop at 1,525 pts), as it climbed 13.0 pts to close at 1,521 yesterday. It opened at 1,508 pts, where the buying momentum persisted towards the end of the session to close at 1,521 pts – while hitting the day’s high at 1,525 pts. Aside from the index testing the immediate resistance, it also formed a “higher low” pattern yesterday – solidify the support above the 1,500-pt level. On the RSI indicator, it has stregthened from below 30% to above 40% level as of late, though still below the 50% level – pending a strong rebound if the resistance is breached. However, since the index has yet to breach the trailing-stop level, we keep to our negative trading bias.

Traders should stay in short positions. We initiated these at 1,569.50 pts, or 11 Jun’s closing. To mitigate trading risks, we pegged the trailing-stop at 1,525.00 pts.

The support levels are set at 1,500 pts and 1,449 pts or the lowest level in Nov 2020. Meanwhile, the nearest resistance level is set at 1,525.00 pts or 9 Jul’s high, and subsequently at 1,550.00 pts (26 Feb’s low).

Source: RHB Securities Research - 16 Jul 2021