Maintain short positions. The FKLI underwent a negative price follow-through yesterday, dropping below the 1,500- 1,515pt resistance zone, following the previous session’s failed attempt to cross above the 1,515-pt resistance. At the close, it shed 16.5 pts to close at 1,491.5 pts. The index is also now back below the 50-day SMA line. Towards the downside, should the 1,476-pt support level be breached in the coming sessions, this will open the door for a deeper retracement to develop. Premised on this, we are maintaining a negative trading bias.

As the index failed in its attempt to extend its rebound, 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.

We revised the immediate support to 1,483.5 pts, the low of 24 Sep. This is followed by 1,476 pts, the low of 29 Jun. Conversely, the immediate resistance is revised to 1,500 pts, followed by 1,515 pts.

Source: RHB Securities Research - 8 Oct 2020