Last Friday, the FKLI rebounded for the third consecutive session, rising 3.50 points to settle higher at 1,602.50 points. Initially, the index started off at 1,598.50 points, then gapped down to touch the day’s low of 1,591 points, RHB Research said.
It said that the bulls then seized the opportunity, with buying pressure lifting the index higher and testing the day’s high of 1,604 points before closing in positive territory and printing a bullish candlestick with a long lower shadow.
It said that the latest price action shows the bulls have a technical advantage over the bears. As the positive momentum picks up its pace, the index may break past the 1603-point resistance to retest the previous high of 1,620 points, which charted on 16 Feb.
Observe that since 3 Mar, there have only been two occasions where the index managed to close above the 1,603-pt level, hence, expect strong selling pressure to resist the upside movement. As long as the immediate resistance stays intact, RHB said that it will hold on to its negative trading bias. Traders should retain the short position initiated at 1,578 points, or the closing of 18 Apr.
To mitigate the trading risks, the initial stop-loss is placed at 1,603 points. The immediate support is revised to 1,591 points – 22 Apr’s low – followed by the lower support at 1,578 points, charted on 18 April. On the flip side, the nearest resistance is eyed at 1,603 pts, followed by the higher hurdle at 1,620 points
