Maintain short positions. The FKLI tested the previous session’s low of 1,624.5 pts with a low of 1,624 pts in the first minutes of the session. From that point the index rebounded sharply, reaching a high of 1,654 pts, before narrowing its advancement to settle 11 pts higher at 1,624.5 pts. The positive price reaction from an area near the 1,621.5 pts support level, the July’s “Double Top” high and also our minimum retracement target, is suggesting a good possibility that the bulls are attempting to mark an interim low for the index. This came after it experienced a relatively sharp decline over the past 1.5 weeks. Should the index able to stage a positive follow-up in the coming sessions by breaching above the 1,657.5 pts resistance, a stronger counter-trend rebound would likely to take place. For now, we are keeping our negative trading bias.

We recommend that traders stick to short positons. We initiated these at 1,665.5 pts, the closing level of 14 Dec. To manage risks, a stop-loss can be set at above 1,657.5 pts.

The immediate support is revised to 1,635 pts, followed by 1,621.5 pts – the high of July’s “Double Top”. Moving up, the immediate resistance is maintained at 1,645 pts, followed by 1,657.5 pts – 21 Dec’s high

Source: RHB Securities Research - 24 Dec 2020