Maintain short positions as the retracement may still be extending. The FKLI staged a positive intraday price reversal. At one point, it reached a low of 1,531.5 pts to test the immediate support of 1,538.5 pts, before rebounding to settle 6 pts higher at 1,544 pts. The positive performance came after the index underwent two consecutive weak closes, after it was rejected from the 1,557.5-1,566.5pt resistance zone. We have yet to see a trend reversal signal, and are maintaining a negative trading bias.

As the possibility of the index at least retesting the 1,518.5-pt level remains high, we recommend that traders remain in short positions. We initiated these at 1,548.5 pts, the closing level of 12 Feb. To manage risks, a stop-loss can be placed above 1,566.5 pts.

The immediate support is set at 1,538.5 pts, the low of 10 Feb. This is followed by 1,526.5 pts, derived from 5 Feb’s candle. Conversely, the immediate resistance is pegged at 1,550 pts, derived from 12 Feb’s candle. This is followed by 1,560.5 pts, the high of 11 Feb.

Source: RHB Securities Research - 17 Feb 2020