Downside Risk Persists for KLCI Futures

RHB Research continues to maintain “short” positions on KLCI futures.

The FKLI extended its sideways consolidation on Monday, dipping 8.50 points to close at 1,437.50 points. The index began the session at 1,443.50 points. After trading within the tight range of 1,449 points and 1,436 points, it closed in negative territory, below the opening price. The bearish body candlestick, coupled with the latest “lower high”, indicates the bulls remain at their weakest state. As the bears stay firmly in control, the index may continue to consolidate beneath the 1,462-point resistance, with downside risk sustaining. In the event the selling pressure increases again, the index could fall back to the 1,424-point support. Still, breaching above the 1,462-point resistance should attract strong buying pressure to rally the index higher. Based on the recent price actions, it is seen the index charting a series of “lower highs”. Additionally, the 50-day has crossed below the 200-day SMA line and enhanced the bearish setup. As of now, the downside risk is much higher. Hence, the research house is sticking to its bearish bias until the trailing-stop is breached.

Traders should keep to the short positions initiated at 1,524.50 points (7 Jun’s close). To minimise the trading risks, the trailing-stop is set at 1,462 points. The immediate support stays at 1,424 points, followed by the 1,400-point psychological level. Conversely, the nearest resistance is pegged at 1,462 points – 22 June’s high – followed by 1,488 points, or the low of 10 June.

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