Maintain short positions. The FKLI drifted lower yesterday, declining 10.50 pts to settle at 1,486.50 pts. The index gapped down to open weaker at 1,492 pts. The index then progressed lower to touch 1,477.50 pts – the day’s low – before closing at 1,486.50 pts. Although the index managed to bounce off the 1,482.50-pt support level to form a Hammer pattern, observed too that it has printed a fresh lower low – indicating sentiment remains weak. Unless the index is able to reverse its momentum to chart a new “higher high”, expect the negative momentum to continue. Premised on this, we are keeping our negative trading bias.

Traders advised to maintain short positions, which were initiated at 1,569.50 pts, or 11 Jun’s close. For risks management, the trailing-stop is fixed at 1,508 pts.

The immediate support remains at 1,482.50 pts – the low of 2 Aug, followed by the lower support at 1,449 pts or the low of Nov 2020. Conversely, the immediate resistance is set at the 1,500-pt psychological level, followed by 1,525 pts or 9 Jul’s high.

Source: RHB Securities Research - 5 Aug 2021