Maintain long positions. The FKLI attempted to move above the immediate resistance last Friday, but strong intraday selling pressure took place to close neutral at 1,512 pts. The index opened at 1,512 pts, then moved higher to touch the day’s high of 1,519 pts, before retracing back to its opening towards the end of the session. It hit the day’s low of 1,510.5 before the close. The latest “Gravestone Doji” bearish reversal candlestick – closed at neutral after strong intraday selling pressure – indicates the recent rally from 1,471 pts on 15 Dec has reached its peak as strong intraday profit taking took place from its peak to close at neutral. As such, we expect strong selling pressure to push the index downwards in the coming sessions towards the 1,500-pt immediate support – coupled with the index still trading below the 50-day average line. In anticipating the potential downtrend reversal, we revise the trailing-stop higher based on last Friday’s low. Until the revised trailing-stop is triggered, we maintain our positive trading bias.

We recommend that traders keep the long positions initiated at 1,496.5 pts, or the closing level of 1 Dec. To mitigate trading risks, we revise the trailing-stop to 1,510.5 pts – 24 Dec’s low. The immediate support is kept at 1,500 pts, followed by 1,485.5 pts – the lowest of 21 Dec. Towards the upside, the nearest resistance is kept at 1,512.5 pts – the high of 1 Dec, followed by 1,533 pts, or the high of 23 Nov.

Source: RHB Securities Research - 27 Dec 2021