Maintain short positions, as the retracement may still at an early stage of development. The FKLI staged a strong intraday positive price reversal as it settled 14.5 pts higher, at 1,384.5 pts, after hitting a low of 1,352.5 pts. We view this as just an indication of profit-taking activity by the bears after the relatively sharp decline, which started from the high of the 20 Apr’s “Shooting Star” formation – 1,425.5 pts. We still believe the FKLI is developing a retracement, as it has completed a rebound that lasted for more than a month, with 20 Apr’s high and being rejected from the 50-day SMA line in the prior session. As such, we are maintaining our negative trading bias.

As the retracement is still likely to be extended, we recommended that traders stay in short positions, initiated at 1,370 pts – closing level of 21 Apr. To manage risks, a stop-loss can be placed above 1,410 pts.

The immediate support is maintained at 1,360 pts, followed by 1,340 pts. Conversely, the immediate resistance is at 1,395 pts – the price point of 21 Apr. This is followed by 1,410 pts, near the 50-day SMA line.

Source: RHB Securities Research - 23 Apr 2020