Maintain short positions as risk for further weakness increases. The FKLI failed to sustain its earlier session’s positive tone. After hitting a high of 1,544.5 pts earlier in the session, the index generally trended lower before closing 36 pts lower at 1,502.5 pts. The closing level placed the index slightly below the 200-day SMA line – a negative price signal – pointing to potential further weakness. Without a price reversal signal, we are keeping 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 can now be placed above 1,544.5 pts.

The immediate support is revised to 1,500-pt round figure, this is followed by 1,491.5 pts – the low of 1 Jul. Conversely, the resistance points are pegged at 1,520 pts and 1,544.5 pts – both are derived from the latest candle.

Source: RHB Securities Research - 4 Sept 2020