Maintain short positions. Last Friday, the FKLI charted a second consecutive white candle to hand in a 11.5-pt gain to close at 1,508.5 pts – marginally crossing above the 200-day SMA line. The index has been developing a rebound phase following the 11 Sep’s “Bullish Engulfing” formation, which appeared near the 1,476-pt support. Towards the upside, the abovementioned rebound may be able to extend further should the index manage to breach above the 1,515-pt resistance. On the downside, a breach of the 1,476-pt support may see the index experience a much deeper retracement phase. For now, we are keeping our negative trading bias.

We advise traders to remain in short positions. We initiated these at 1,491 pts, the closing level of 21 Sep. To manage risks, a stop-loss can be set above 1,515 pts.

The immediate support is revised to 1,497 pts, followed by 1,483.5 pts, the low of 24 Sep. Towards the upside, the resistance points are now pegged at 1,515 pts and 1,525 pts.

Source: RHB Securities Research - 28 Sept 2020