Trailing stop triggered; initiate short postions. The FKLI saw profit taking activities taking place yesterday as it opened 6 pts down at 1,579 pts. During the session, selling pressure continued, causing the index to descend to a session low of 1,545 pts. However, during the last trading hour, due to the sellers booking intraday profits, the index pared earlier losses and rebounded to 1,560 pts. With the latest price action, we think that the index needs to consolidate and form a base near 1,545 pts before re-testing the 1,586-pt mark resistance. Since the RSI is still pointing upwards, the current downward correction may likely be short-lived or just a minor trend. With the trailing stop triggered, we switch to a negative trading bias.

Our previous long positions initiated at 1,509 pts – the closing level of 5 Nov – were closed out at the latest session of 1,568.5 pts. Concurrently, we initiate short positions. To manage risks, we set a stop loss above 1,586 pts.

The immediate support will be the recent low of 1,545 pts, followed by 1,532 pts. On the upside, the immediate resistance is pegged at 1,586 pts, followed by the round figure of 1,600 pts.

Source: RHB Securities Research - 12 Nov 2020