Maintain short positions. The FKLI marked a third consecutive of weak closes yesterday, shedding 3.5 pts to close at 1,566.5 pts. Yesterday’s low was registered at 1,559 pts. The weak session saw the index coming close to testing the 50-day SMA line. A downside breach of this line could open the door for further weakness. All in, the correction that started from the recent failed attempt to cross the 1,621.5-pt level is still not exhausted yet, despite the emergence of the “Hammer” formation on 4 Aug. We maintain 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 set above 1,585 pts.

We are keeping the immediate support target at 1,558 pts, the low of 10 Aug. This is followed by 1,547 pts, 4 Aug’s low. Moving up, the immediate resistance is set at 1,585 pts, followed by 1,600 pts

Source: RHB Securities Research - 17 Aug 2020