After rebounding on Tuesday, the FKLI reversed momentum yesterday to reclaim the spot below the 50-day average line. It shed 10 points to close at 1,586 points, RHB Research said.
Yesterday, after opening at 1,594 points, it moved south throughout the session and registered the session’s low of 1,582 points low, before undergoing a mild rebound towards the close. This bearish price action following Tuesday’s attempt to rebound has formed a technical pattern of a “lower high” bearish structure.
Note that, as long as the index fails to rebound above the strong resistance of 1,603 points, the bearish bias should remain intact. This, coupled with the weakening RSI at the 48% level, compels us to think that the FKLI will continue to trade below the 50-day average line to fall towards 1,578-point support. As such, we maintain a bearish trading bias unless the momentum reverses to trigger the stop-loss.
Traders should stick to the short positions initiated at 1,578 points, or the close of 18 April. To mitigate the trading risks, the initial stop-loss is set at 1,603 points. The first support remains at 1,578 points (18 Apr’s low), followed by 1,543.50 points (15 Mar’s low). Meanwhile, the immediate resistance is at 1,603 points, followed by 1,620 points.
