Maintain short positions. The FKLI once again failed to settle above the resistance zone of 1,500-1,515 pts in the latest session, despite several attempts over the past two weeks. After hitting a high of 1,525.5 pts, the index slid to close at 1,508 pts – indicating a 6.5-pt drop. Without a clear breakout from the 1,515-pt resistance, prospects for the index to extend its rebound phase following the 11 Sep’s “Bullish Engulfing” formation remain capped at this juncture. Hence, we are keeping our negative trading bias.

Until signs of a stronger rebound are confirmed, 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 maintained at the round figure of 1,500 pts, this is followed by 1,483.5 pts, the low of 24 Sep. On the upside, the immediate resistance is kept at 1,515 pts, followed by 1,538 pts ie the high of 17 Sep.

Source: RHB Securities Research - 7 Oct 2020