Risk of the 1,518.5-pt level being retested remains high; maintain short positions. The FKLI’s weak bias was extended again yesterday, as it shed 8 pts to close at 1,532.5 pts – thereby breaching the previous immediate support of 1,538.5 pts. The breakdown from the said support happened after it was tested over the recent sessions, and is deemed as a negative signal. Based on the current technical picture, we believe the current bout of retracement – which resumed on the back of a price rejection from the 1,557.5-1,566.5pt resistance zone – is still in place, and could see the 1,518.5-pt level being retested. Premised on this, we maintain our negative trading bias.

As the retracement will likely be extended, we advise traders to stay 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 at the breakeven level.

Immediate support is now pegged at 1,526.5 pts, derived from 5 Feb candle. This is followed by 1,518.5 pts, the low of 3 Feb. Towards the upside, the immediate resistance is now pegged at 1,543.5 pts, the latest session’s high. This is followed by 1,550 pts, derived from 12 Feb’s candle.

Source: RHB Securities Research - 20 Feb 2020