Maintain short positions. The FKLI closed 12.5 pts higher, at 1,584 pts, yesterday. The index formed a price reversal “Hammer” formation in the previous two sessions, as it came close to testing the 50-day SMA line. Based on the latest two sessions’ price actions, we believe the “Hammer” formation would be confirmed if the index crosses above the 1,585 pts. Pending this, we make no change to our negative trading bias.

We continue to recommend that traders remain in short positions. We initiated these at 1,569.5 pts, the closing level of 3 Aug. To manage risks, a stop-loss can now be placed above 1,585 pts.

We are maintaining the immediate support target at 1,564 pts, the low of 16 Jul. This is followed by 1,547 pts, which is 4 Aug’s low. Conversely, the immediate resistance is revised to 1,585 pts, followed by 1,600 pts.

Source: RHB Securities Research - 7 Aug 2020