Maintain short positions. The FKLI firmly crossed above the 50-day SMA line last week, and closed 27 pts higher, at 1,411 pts – indecisively above the immediate resistance of 1,410 pts . It reached a high of 1,419 pts. At this juncture, pending further positive price actions in the coming sessions, we believe that it is possible that the index has not yet completed its correction, which set in after 20 Apr’s “Shooting Star” formation. This is based on the bias that the index’s sharp counter-trend rebound that took place between 17 Mar and 20 Apr has been completed. As such, we are maintaining our negative trading bias.

Traders should stay in short positions, initiated at 1,370 pts – the closing level of 21 Apr. To manage risks, a stop-loss can be placed above 1,410 pts.

The immediate support is revised to 1,385 pts, the price point of 29 Apr. This is followed by 1,365 pts – derived from 24 Apr’s candle. Moving up, the immediate resistance is maintained at 1,410 pts as it was not decisively breached, and then followed by 1,425.5 pts, the high of the 20 Apr’s “Shooting Star” formation.

Source: RHB Securities Research - 4 May 2020