Bears are in firm control; maintain short positions. The FKLI’s retracement phase continued to extend, ending at 1,520.5 pts. The low was registered at 1,513.5 pts – not too far away from the 200-day SMA line. While the index has managed to narrow its losses from an area near the said SMA line, it was insufficient to signal a trend reversal. Broadly, the multi-week retracement phase is still not showing signs of reaching an end. Towards the downside, a breach of the said SMA line could potentially open the door to further weakness. Maintain our 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 is now set at the breakeven mark.

The immediate support is revised to 1,513.5 pts, the latest low. This is followed by 1,500 pts. Conversely, the resistance points are set at 1,540 pts and 1,559.5 pts – the high of 27 Aug.

Source: RHB Securities Research - 2 Sept 2020