Maintain short positions as retracement phase has likely resumed. The FKLI formed a “Downside Gap” to settle the session sharply lower at 1,360.5 pts. Consequently, the previous two support levels of 1,385 pts and 1,365 pts as well as the 50-day SMA line were also breached. Chances are high that the index has likely resumed its correction phase which started from the high of 20 Apr’s “Shooting Star” formation of 1,425.5 pts. The said formation has, in our view, marked the end of the index’s counter-trend rebound that has lasted over a month. Towards the downside, we are still expecting the index to retrace towards the 1,300-1,350-pt area. Maintain our negative trading bias.

As the index’s correction phase is still likely to extend, traders are advised to 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 1,352.5 pts, the low of 22 Apr, this is followed by 1,340 pts, near the low of 22 Apr. Meanwhile, the immediate resistance is pegged at 1,375 pts – price point of the latest session. This is followed by 1,400 pts.

Source: RHB Securities Research - 5 May 2020