Maintain short positions; retracement may be resuming. The FKLI continued to trade on a weak tone, closing 15.5 pts lower at 1,551 pts yesterday – the low was recorded at 1,541 pts. The closing level placed the index marginally below the 50-day SMA line, thereby reinforcing the index’s weak trend. Towards the upside, this negative bias would remain in place, as long as the index is still capped by the 1,585-pt resistance. We maintain our negative trading bias.

As the retracement phase may be extended, traders should 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 revise the immediate support to 1,541 pts, the latest low. This is followed by 1,535 pts, a price point of 3 Jul. Conversely, the immediate resistance is set at 1,565 pts, followed by 1,585 pts – near the high of 7 Aug.

Source: RHB Securities Research - 13 Aug 2020