Maintain short positions. The FKLI saw sentiment becoming risk-off on the eve of the national public holiday – declining 13.50 pts to settle at 1,529.50 pts. It initially started in the morning on a positive note, gapping up to open at 1,546.50 pts. However, the bears were not convinced by the strong opening, taking profit as the session progressed. The index fell to the 1,527-pt day low just before the session closed weaker at 1,529.50 pts – negating the Bullish Harami. We have observed the RSI falling into oversold territory – hence, the FKLI is likely to rebound in the near future before drifting lower. As we mentioned in a previous note, the index has to break past the 1,546.50-pt immediate resistance to stage a meaningful technical rebound. Hence, for the immediate term, it may move between 1,523.50 pts and 1,546.50 pts. We will stick to a negative trading bias until the trailing-stop mark is breached.

Traders are recommended to stick with short positions – initiated at 1,584 pts or the closing level of 26 Oct. For tradingrisk management, the trailing-stop threshold is set to 1,547 pts.

The immediate support remains at 1,523.50 pts – 1 Nov’s low – and followed by 1,505 pts, ie 5 Oct’s low. Conversely, the nearest resistance is sighted at 1,546.50 pts or 3 Nov’s high. A higher hurdle will be at the 1,560-pt whole number.

Source: RHB Securities Research - 5 Nov 2021