Maintain short positions. Despite the FKLI retracing and testing the immediate support, the threshold remained intact during Friday’s close. It rebounded 3.5 pts to settle at 1,567 pts. After the index opened at 1,565.50 pts, it retraced to test the immediate support at 1,562 pts. Buying interest emerged near the support or the session’s low and lifted the FKLI towards the 1,574.50-pt session high. Mild profit taking in the afternoon saw the index retreat lower to close at 1,567 pts. As mentioned in the previous note, the index is sandwich between 1,562 pts and 1,584 pts. Expect the index to continue moving sideways until either of the boundary is breached. As the FKLI has yet to form any “higher high” pattern lately, we believe the downside risk remains. Coupled with the RSI breaching the trendline and pointing downwards, the negative momentum is gaining strength. Hence, we maintain our negative trading bias.

We recommend traders keeping their short positions initiated at 1,569.50 pts, or the close of 2 Sep. To control the trading risks, the stop-loss threshold is placed at 1,584 pts.

The immediate support is marked at 1,562 pts, followed by the lower support at 1,550 pts. Towards the upside, the nearest resistance pegged at 1,584 pts, the high of 8 Sep, followed by the 1,600-pt psychological level.

Source: RHB Securities Research - 13 Sept 2021