Maintain short positons. The FKLI finished on a weak note yesterday, shedding 19.5 pts to close at 1,495.5 pts – thereby breaching below the 1,500-1,515pt zone. The 200-day SMA line is, again, at risk of being breached. This, if it happens, will confirm that the multi-week counter-trend rebound has ended, and the index is likely to extend its correction phase that started from July’s “Double Top” formation. Addtionally, the RSI is also near to break below its support line. We maintain 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 now be placed above 1,530 pts.

The immediate support is revised to 1,483.5 pts, the low of 24 Sep. This is followed by 1,476 pts – the low of 29 Jun. Towards the upside, the immediate resistance is eyed at 1,500 pts, followed by 1,515 pts.

Source: RHB Securities Research - 22 Oct 2020