Maintain short positions. The FKLI reached a low of 1,558 pts before rebounding to cut losses to 8 pts at 1,570.5 pts. Despite the 4 Aug “Hammer” formation that emerged near the 50-day SMA line, the index failed to stage a positive follow-through to indicate that a deeper rebound is taking place. As such, the retracement phase that started from the failed attempt to cross above the 1,621.5-pt resistance is still firmly in place. Meanwhile, downside breach of the SMA line would signal a deeper retracement is likely to develop. We maintain a 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 set above 1,585 pts.

The immediate support is revised to 1,558 pts, the latest low. This is followed by 1,547 pts, 4 Aug’s low. Towards the upside, the immediate resistance is set at 1,585 pts, followed by 1,600 pts.

Source: RHB Securities Research - 11 Aug 2020