The FKLI staged a strong rebound last Friday, climbing 13 points to close at 1,543 points – recouping most of the losses incurred on Thursday’s session, RHB Research said in a note.
It said that It initially opened at the day’s low ie 1,530 points but as the session progressed, momentum reversed and caused the index climb to the day’s high of 1,550 points before closing at 1,543 points.
Despite the latest candlestick closing below the 50-day SMA line, the bearish candlestick that formed on Thursday has weakened. If the index manages to cross above the 50-day SMA line and breaks past the 1,556.50-point threshold, there is a possibility of the momentum continuing towards the 1,578-point resistance.
Observe that the RSI crossed above the 40% level, this suggests the index has reached the oversold region and is poised to stage an upside movement. However, at this stage, the latest session’s high is still below the previous four sessions’ high.
As the index has yet to form a convincing “higher high” or bullish reversal pattern, RHB Research said that it still holds on to our negative trading bias.
RHB said that it advises traders to retain the short positions initiated at 1,576.50 points, or the close of 5 May.
To manage the trading risks, RHB said that the stop-loss is revised to 1,563 from 1,578 points. “The immediate support is fixed at 1,518 points – 8 Mar’s low – followed 1,500 points. Meanwhile, the immediate resistance stays at 1,556.50 points – 9 May’s high – followed by 1,578 points, or the high of 6 May,” it said.