Maintain short positons. The FKLI tested the immediate support of 1,515 pts with a low of 1,513 pts, before closing 7.5 pts weaker at 1,520.5 pts yesterday. The weak closing signals the lack of a positive follow-through from the prior session’s rebound. Additionally, the index continues to stay beneath the 50-day SMA line – a level from which it was rejected on 12 Oct. Towards the downside, should the 200-day SMA line give way – which is a line where the bulls had been defending over the past month – this would lead to the escalation of the index’s retracement. As such, we are maintaining a negative trading bias,

We recommend that traders stick to short positons. We initiated these at 1,510 pts, the closing level of 12 Oct. To manage risks, a stop-loss can be placed above 1,540 pts.

The immediate support remains at 1,515 pts, followed by 1,500 pts. On the upside, the immediate resistance is set at 1,540 pts, followed by 1,560 pts.

Source: RHB Securities Research - 15 Oct 2020