Maintain short positions. The FKLI closed on a strong footing yesterday, closing 23.5 pts higher at 1,518.5 pts – off the high of 1,529.5 pts. The increase effectively placed the index back above the zone between 1,500 pts (the previous multi-year double-top support) and1,515 pts (near the 200-day SMA line). Even with recapturing this important zone, we believe the recent sessions’ correction phase is still incomplete. The FKLI’s latest performance can be regarded as a counter-trend rebound within the correction phase. As such, we are maintaining our negative trading bias.

We advise traders to stay in short positions. We initiated these at 1,548.5 pts – the closing level of 11 Jun. To manage risks, a stop-loss can be set above 1,560-pts.

The immediate support is revised to the 1,500-pt mark. This is followed by 1,484 pts, the low of 15 Jun. Conversely, the immediate resistance is at 1,545 pts, derived from 12 Jun’s candle, followed by 1,565 pts, which is the price point of 11 Jun.

Source: RHB Securities Research - 17 Jun 2020