The FKLI failed to keep its position above the 1,528-point support yesterday, breaching the threshold to reach a 3-month low. After three consecutive bearish sessions, it started Tuesday’s session at 1,540 points, RHB Research said
It then touched the 1,542.50-point session high and retreated towards the 1,522.50-point session low before closing in negative territory for a fourth consecutive session. The latest price action saw the index drifting further away from the 200-day SMA line and charting a fresh “lower low” bearish pattern.
Coupled with the 1,528-point support giving way, RHB Research deems the bears as having regained control. The FKLI should travel lower to test 1,518 points followed by the 1,500-point psychological level. If the index stages a rebound, the selling pressure near the 200-day SMA line or 1,550-point resistance will refrain the FKLI from going higher.
Since the bears are now in the driving seat, RHB Research shifts to a negative bias. “We closed out the long positions initiated at 1,552 points – the close of 31 May – after the stop-loss point at 1,528 points was triggered, “it said
Conversely, we initiate short positions at the closing of 7 Jun, ie 1,524.50 points. To manage the trading risks, the initial stop-loss threshold is set at 1,555 points.
The immediate support is changed to 1,518 points – 08 Mar’s low – and followed by the 1,500-point whole number. The immediate resistance remains at 1,550 points – 3 Jun’s open – and is followed by 1,565 points, ie the high of 1 Jun.