Maintain short positions while moving up trailling-stop. After hovering over the past three sessions around the previous low of 1,572 pts posted on 7 Jan, the FKLI fell through that level in the latest session. This marked an extension of the correction phase that began with 14 Dec 2020’s price rejection from the 1,700-pt level. For the Friday session, the index repeated its playbook over the past 1.5 weeks by starting the session strongly and hitting a high of 1,591 pts before generally sliding lower for the rest of the day to settle at 1,565 pts. While a minor rebound may take place in the coming sessions, the index’s downward move would stay intact as long as it is still trading under the multiweek downtrend line (as drawn in the chart). Additionally, the RSI has yet to flash out an oversold reading. Maintain our 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 1,595 pts.

Support levels are eyed at 1,545 pts – the low of 11 Nov 2020, followed by 1,530 pts – near the 200-day SMA line. On the upside, the resistance points are pegged at 1,575 pts and 1,595 pts.

Source: RHB Securities Research - 2 Feb 2021