Maintain short positions. The FKLI rebounded higher yesterday, climbing 11.5 pts to settle at 1,471 pts. The index started with a 3-pt gap-up at 1,462.5 pts, briefly traded at the session’s low of 1,457, then gained 18 pts to hit the day’s high of 1,475 pts. It retraced 4 pts from the high to close at 1,471 pts. After hitting the low of 2 Nov, ie 1,449 pts, the index has been recovering over the last three sessions, thereby consolidating into a flag pattern. With the RSI still below the 50% mark, we believe the consolidation will remain in effect until the boundary is breached. Since the flag pattern indicates that the bears still in control and neither resistance level has been breached, we maintain a 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 is revised at the 1,488.5-pt mark.

The immediate support remains at 1,449 pts, the low of 2 Nov, followed by 1,442.5 pts. On the upside, the immediate resistance is set at 1,477 pts, followed by 1,488.5 pts, the high of 30 Oct.

Source: RHB Securities Research - 10 Nov 2020