Maintain short positions. The negative momentum on the FKLI was extended yesterday, and the index shed 12.50 pts to close at 1,568 pts. In the morning, it opened weaker at 1,574 pts then tried to stage a rebound, jumping higher to reach the session’s high of 1,582.50 pts. The bulls did not follow through, so the FKLI reversed direction to touch the session’s low of 1,565 pts, before closing at 1,568 pts. The latest session showed that bears were still in control of the session. Coupled with the RSI dropping below the 50% threshold, the index may see negative momentum dragging it down further. The correction should continue until we see a candlestick appear with a long lower shadow, or form a bullish reversal pattern. For immediate session, the FKLI may attempt to establish an interim base near the 200-day SMA line. For now, however, we maintain a negative trading bias.

We recommend that traders stick to short positions, initiated at the closing level of 26 Oct, ie 1,584 pts. To control the trading risks, the stop-loss is adjusted to 1,594 pts.

The immediate support has been revised to 1,564 pts (11 Oct’s low), followed by 1,546.50 pts (7 Oct’s low). The first resistance is pegged at 1,582.50 pts ie the high of 28 Oct, then 1,600 pts.

Source: RHB Securities Research - 29 Oct 2021