Maintain short positions. The FKLI underwent a positive intraday price reversal, ending 4 pts higher at 1,564.5 pts, after it tested the immediate support of 1,555 pts. Despite the positive price action, the index’s 50-day SMA line remains under pressure. A downside breach of this SMA line could lead to further weakness. At this juncture, the index’s correction phase that started from the failed attempt to cross above the 1,621.5-pt mark is still not showing signs of completion. We maintain a negative trading bias.

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 are maintaining the support targets at 1,555 pts, the price point of 15 Aug. This is followed by 1,541 pts, the low of 12 Aug. Moving up, the immediate resistance is set at 1,577.5 pts, the high of 13 Aug. This is followed by 1,585 pts, a point near 7 Aug’s high.

Source: RHB Securities Research - 24 Aug 2020