Maintain short positions until reversal is confirmed. The FKLI staged a strong comeback in the latest session to close marginally lower by 0.5 pt at 1,560.5 pts. This was after it came near to test the immediate support of 1,547.5 pts, with an intraday low of 1,548.5 pts. The said support has been showing resiliency over the latest two sessions, as prices have managed to settle relative comfortable above this level. Based on this observation, chances are high that the index recent weeks’ correction phase may have reached its low. However, to confirm this, further positive price actions are needed in the coming sessions. Until this happens, we keep to our negative trading bias.

Until a positive price reversal signal emerges, we recommend traders to stay in short positions. We initiated these at 1,564 pts, the closing level of 29 Nov. To manage risks, a stop-loss can now be placed at the breakeven level.

The immediate support is expected at 1,547.5 pts, the low of 10 Oct, followed by 1,500-pt level. Conversely, the immediate resistance is eyed 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 - 5 Dec 2019