Maintain long positions. The FKLI experienced a strong retracement yesterday, falling 13.5 pts to settle at 1,511 pts. The index started on a weak note, gapping lower to open at MYR1,521.50 pts. After touching 1,522 pts, it travelled south to close at 1,511 pts, which was also the day’s low. The bearish candlestick with a shaved lower shadow is an indication that the bears have overpowered the bulls. Hence, expect the negative momentum to follow through in the coming session. However, we think that the bulls may attempt to stage a technical rebound in between the 1,510-pt and 1,493-pt support levels. If the 1,493-pt level gives way, the recent rebound would be deemed as completed. As long as the stop-loss threshold stays intact, we keep to our positive trading bias.

Traders should maintain long positions initiated at 1,524 pts, or the close of 17 Aug. To manage trading risks, the initial stop-loss is set at 1,493 pts.

The immediate support remains at 1,510 pts, the low of 28 Jul, followed by 1,493 pts, or the low of 11 Aug. Meanwhile, the nearest resistance is pegged at 1,533 pts – the high of 2 Jul, then the higher resistance of 1,550 pts.

Source: RHB Securities Research - 20 Aug 2021