The Malaysia stock market has moved lower in three straight sessions, shedding almost 90 points or 5.5 percent along the way.
The Kuala Lumpur Composite Index now rests just above the 1,535-point plateau and it's likely to take further damage again on Tuesday.
RHB Retail Research (RHB) in a note today (Aug 6) said amidst strong selling pressure, the FKLI plunged 89 pts and closed at 1,530 pts, after undergoing its largest correction since Mar 2020.
The index opened at 1,606 pts and fell to the day's low of1,530 pts before the close, thereby breaching the 1,590-pt support.
The latest long bearish candlestick, coupled with the bearish breakout, shows that the bears are in control now.
The RSI has fallen below the 50% mark, ie negative momentum is in play.
As such, the FKLI may retrace towards 1,500 pts.
In the event of a technical rebound, it may test the immediate resistance at the 1,560-pt level.
Since the index has breached the stop-loss point, RHB said they now have a negative trading bias.
They closed out the long positions (initiated at 1,624.50 pts ie the close of 4 Jul) as the stop-loss at 1,590 pts has been triggered.
Conversely, traders can initiate short positions at the close of 5 Aug, ie 1,530 pts.
To manage the trading risks, the initial stop-loss is at 1,560 pts.
The first support has been revised to 1,500 pts, followed by 1,475 pts.
Towards the upside, the first resistance is now at 1,560 pts, followed by 1,590 pts.