Maintain short positions, while moving down the trailing-stop. After developing a minor consolidation in recent sessions, the FKLI formed a black candle to crush through the support zone, which consisted of the 200-day SMA line and 29 Jun’s low of 1,476 pts. It closed 25.5 pts lower, at 1,467.5 pts, last Friday. The breaching of the support zone is a negative technical observation, and supports our thesis that the index’s correction phase that started from the “Double Top” formation in July may likely be extended. Also, the RSI has breached the support line, with a reading below the 50 neutral threshold. We maintain our negative trading bias.

We recommend that traders remain in 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 1,500 pts

The immediate support is revised to 1,456 pts – the latest low, followed by 1,442.5 pts – the low of 29 May. Moving up the immediate resistance is set at 1,476 pts – the low of 29 Jun, followed by 1,500 pts

Source: RHB Securities Research - 2 Nov 2020