Maintain short positions. The FKLI gave up all intraday gains yesterday, closing 3 pts lower at 1,487 pts. The index opened on a positive note at 1,491.5 pts, and whipsawed in a downward direction – between the day’s high of 1,492.5 pts and low of 1,485.5 pts – before rebounding mildly towards the close at 1,487 pts. The latest black body candlestick, following recent strong selling pressure below the 1,500-pt level, suggests that the bears are still in control. Supported by the further weakening of the RSI, which is pointing lower towards 40%, the index is expected to fall further towards the immediate support of 1,471 pts in the medium term. As such, we keep our negative trading bias until the stop-loss is triggered.

Traders should remain in the short positions initiated at 1,496.50 pts – the close of 1 Dec. To mitigate trading risks, the stop-loss has been revised lower to 1,500 pts.

The immediate support is fixed at 1,471 pts – 15 Dec’s low – and 1,465 pts. On the upside, the nearest resistance is still at 1,500 pts, followed by 1,512.50 pts or the high of 1 Dec.

Source: RHB Securities Research - 22 Dec 2021