Maintain short positions while moving the trailing stop to breakeven. The FKLI retested the YTD low of 1,547.5 pts in the latest session, as it recorded an intraday low of 1,545.5 pts. The rebound took place from the said low and at the closing, the index managed to recoup most of its earlier losses, settling 9.5 pts lower at 1,560.5 pts. The sharp rebound from the said support is suggesting that the index’s recent weeks’ retracement could be reaching an end. To confirm this, further positive price actions are needed in the coming sessions. Until this happens, we keep to our negative trading bias.

Pending additional positive price actions to confirm the end of the said correction phase, we recommend traders to stay in short positions. We initiated these at 1,564 pt, the closing level of 29 Nov. To manage risks, a stop-loss can now be placed at the breakeven level.

The immediate support is revised to 1,547.5 pts, the low of 10 Oct, followed by the 1,500-pt threshold. Moving up, the immediate resistance is expected to emerge at 1,588.5 pts, the high of 29 Nov. This is followed by 1,621.5 pts, the high of 9 Aug.

Source: RHB Securities Research - 4 Dec 2019