Maintain short positions. The FKLI saw selling pressure heightened on Monday, retreating 8 pts to settle at 1,559 pts – breaching the previous support of 1,562 pts. On the first trading session of the week, the index opened at 1,568 pts. After touching the 1,569.50-pt day high, the index fell to reach the 1,556-pt day low. It recouped some losses to close weaker at 1,559 pts. Since the index broke past the support, we anticipate the negative price action to follow through and test the next support at the 1,550-pt level. In the event the index bounces back above the 1,562-pt level, the recent bearish breakout may be deemed as a failed breakout. At this stage, the RSI is trending lower, indicating the negative momentum is accelerating. As such, we are keeping to our negative trading bias.

Traders should stick to their short positions initiated at 1,569.50 pts, or the close of 2 Sep. To manage the trading risks, the stop-loss threshold is placed at 1,584 pts.

The immediate support is revised to 1,550 pts, followed by the next support at 1,530 pts. Towards the upside, the first resistance is pegged at 1,562 pts, the low of 6 Sep, followed by 1,584 pts ie the high of 8 Sep.

Source: RHB Securities Research - 14 Sept 2021