Trailing-stop triggered; initiate short positions. The FKLI fell 4.5 pts to close at 1,584 pts. Yesterday, the index started on a positive tone at 1,590 pts to hit the day’s high of 1,591 pts before selling pressure kicked in, which saw the index falling sharply towards the intraday’s low at 1,580.5 pts. It then moved in a sideways direction while partially recouping its losses to close. The black body candlestick that closed below the support – also its trailing-stop – has solidified its “lower low” bearish pattern, which may see the index moving further downwards in the coming sessions. This is also in tandem with the declining strength shown by the RSI during the latest session. In line with our cautious sentiment mentioned earlier, while breaching the trailing-stop level, we shift to a negative trading bias.

We closed out our long positions, initiated at 1,556 pts or the closing level of 6 Oct, after the trailing-stop at 1,586 pts was triggered. Conversely, we initiate short positions at the closing level of 26 Oct at 1,584 pts. To manage trading risks, the initial stop-loss threshold is placed at the 1,610-pt level.

The immediate support is revised to 1,577 pts (22 Oct’s low), followed by the lower support at 1,564 pts (11 Oct’s low). Conversely, the nearest resistance is pegged at 1,586 pts, followed by the round figure of 1,600 pts.

Source: RHB Securities Research - 26 Oct 2021