Maintain short positions. The FKLI consolidated near the support level on Wednesday, recouping 2 pts to settle at 1,579 pts. The index opened flat at 1,580 pts, and climbed towards day’s high of 1592 pts. After the lunch break, it retraced to touch the day’s low of 1,577 pts, before settling at 1,579 pts. The latest session showed the bears gripping the index, printing another lower high pattern. Selling pressure was seen during the intraday rebound. With the prevailing trend, we think the downside risks remain, and that it is very likely the index will test the support level soon. If the support level gives way, we expect to witness a larger correction or lower low pattern. As the main trend is down, we maintain a negative trading bias.

We recommend traders keep to short positions, which were initiated at 1,598 pts, or the closing level of 21 Jan. To manage risks, a stop-loss can be set above 1,610.50 pts.

The immediate support remains at 7 Jan’s low of 1,572 pts, followed by 1,563 pts. Towards the upside, the resistance is pegged at the psychological level of 1,600 pts, followed by 19 Jan’s closing of 1610.50 pts.

Source: RHB Securities Research - 29 Jan 2021