Maintain short positions. The FKLI staged a strong rebound yesterday, rising 7.5 pts to settle at 1,494 pts. On Thursday, the index opened flat at 1,486 pts. Not long after, it climbed higher on strong buying interest, and tested the intraday high of 1,497 pts. It trended sideways near the day’s high until trading closed for the day. Note that the white body candlestick comes with a shaved lower shadow, indicating that selling pressure is subsiding and that the index may have found a strong footing in previous sessions. If the current bullish momentum follows through, the FKLI may reclaim the 1,500-pt level in the sessions ahead. This may enhance the technical set-up. Otherwise, breaching the 1,482.50 support level may see sentiment dampened – whereupon a further correction may happen. Until the index moves higher, we make no change to our negative trading bias.

We advise traders to keep to short positions, which were initiated at 1,569.50 pts, or 11 Jun’s close. To manage trading risks, the trailing-stop is set at 1,508 pts.

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

Source: RHB Securities Research - 6 Aug 2021