Negative Momentum Picking Up Pace Again for FKLI: RHB Research

The research house maintains ‘short’ position on the FKLI as the FKLI slipped below the 50-day SMA line yesterday, obviously the bears gained momentum.

It retraced 9 points to close at 1,547.50 points , that is barely above the 200-day SMA line. Yesterday, the FKLI opened at 1,554.50 points and rose to test the session’s high of 1,561.50 points. Sentiment turned bearish in the afternoon, and the FKLI fell to its session’s low of 1,543.50 points before closing.

The latest price action led to a “lower high” together with a “lower low” pattern, which indicates that the recent rebound which started from 1,518 points is coming to an end. If the index drops below the 1,545.50-point support level or the 200-day SMA line, expect strong selling pressure to drag it towards March’s low of 1,518 points. Meanwhile, the 1,566.50-point level remains intact and serves as a strong resistance point. As the RSI is moving downwards – indicating that the bears are growing stronger, we make no change to our negative trading bias.

According to the research house, traders of this futures should stick to the short positions initiated at 1,550 points or the close of 7 March. To manage trading risks, the stop-loss is set at 1,566.50 points.

The immediate support stays at 1,545.50 points, that was 11 March’s low – followed by 1,518 points or the low of 8 March. Towards the upside, the immediate resistance is pegged at 1,566.50 points – 24 February’s low – followed by 1,600 pts.

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