No reversal signal from the support zone; maintain short positions. The FKLI tested the support zones of 1,480 pts and 1,476 pts – with a low of 1,477 pts, before rebounding to close at 1,487.5 pts – a 4.5-pt decline. Looking at the intraday price movements, the positive price reaction from the said support zone was not convincing enough to suggest that a reversal is likely to take place. This support zone is crucial as it was the low prior to the previous final upleg, which took place between end-Jun and end-July. Should this support zone be breached, there is a greater risk of the ongoing retracement extending. For now, we 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 can now be placed above 1,520 pts.

The support zones of 1,480 pts and 1,476 pts are maintained. Meanwhile, the resistance points stay at 1,500 pts and 1,520 pts.

Source: RHB Securities Research - 11 Sept 2020