Maintain short positions while tightening up risk management. The FKLI staged a positive intraday price reversal to settle 6.5 pts higher at 1,510 pts. Trading ranged between 1,493.5 pts and 1,512.5 pts. The session’s high indicates the bulls are still attempting to cross above the 200-day SMA line. Based on the index’s recent price actions, we believe should the 1,515-pt immediate resistance be breached, the index may be able to stage a stronger counter-trend rebound to correct the sharp retracement that started from the high of 1,586.5 pts on 9 Jun. Until this happens, we keep to 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 now be set above 1,515 pts.

The immediate support is set at the 1,500-pt mark. This is followed by 1,484 pts, the low of 15 Jun. Meanwhile, the immediate resistance is maintained at 1,515-pts (slightly above the 200-day SMA line). This is followed by 1,545 pts, derived from 12 Jun’s candle.

Source: RHB Securities Research - 22 Jun 2020