Maintain short positons. The FKLI gained 23.5 pts to settle at 1,520.5 pts, crossing above the resistance zone of 1,500-1515 pts. This happened after the index came close to testing the 200-day SMA line in the prior session – this indicates the bulls’ desire in preventing a downside breach from the said SMA line, which, if happened, would trigger significant damage to the index’s technical picture and open the door for further price retracement. Nevertheless, towards the upside, provided the index is still capped by the 200-day SMA line, we continue to keep our 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 is revised to 1,515 pts, followed by the round figure of 1,500 pts. On the upside, the immediate resistance levels are 1,530 pts and 1,540 pts.

Source: RHB Securities Research - 20 Oct 2020