Maintain short positions. The FKLI retested above its immediate resistance last Friday before paring the gains below it to end the day by climbing 1.50 pts to 1,524.50 pts – slightly beneath the immediate resistance level of 1,525 pts. The index began the session neutral at 1,522.50 pts. It then whipsawed between the high and low of 1,528.50 pts and 1,520 pts during early session before moving sideways towards the end of the session to close at 1,524.50 pts. Premised on a RSI indicator that is curving upwards, this indicates that the bullish momentum is gaining traction, where the FKLI will accelerate if breaches the 50% threshold. However, if the momentum reverses, the index may fall towards the 1,500-pt support level. Before it moves above the immediate resistance, we maintain our negative trading bias.

Traders are advised to maintain short positions. We initiated these at 1,569.50 pts, or 11 Jun’s close. To control trading risks, we set the trailing-stop level at 1,525 pts – the nearest resistance threshold.

The immediate support mark is seen at the psychological level of 1,500 pts, followed by 1,449 pts, or Nov 2020’s low. Meanwhile, the next two resistance levels are pegged at 1,525 pts – 9 Jul’s high – and 1,550 pts, ie the low of 26 Feb.

Source: RHB Securities Research - 26 Jul 2021