Maintain short positions. After several attempts over the past week, the FKLI finally crossed above the 1,400-pt resistance point yesterday, settling 10 pts higher at 1,410 pts. The positive session can be seen as part of the rebound that has been taking place after the index tested the 50-day SMA line recently. However, its failure to settle above the 1,410-pt level indicates that the near one-month’s correction phase that started from the high of 21 Apr’s “Shooting Star” formation is still not nullified yet. This correction phase set in following the sharp rebound that took place between 17 Mar and 21 Apr. Premised on this, we maintain our negative trading bias.

Traders are advised to remain in short positions. These were initiated at 1,370 pts, the closing level of 21 Apr. To manage risks, a stop-loss can be placed above 1,410 pts.

We revise the immediate support to the 1,400-pt level, followed by 1,380 pts (the price point of 13 May). Moving up, the immediate resistance now pegged at 1,416.5 pts, the high of 4 May, followed by 1,425.5 pts – the high of the 21 Apr’s “Shooting Star” formation.

Source: RHB Securities Research - 19 May 2020