Maintain short positions. As highlighted yesterday, the FKLI staged a minor rebound in the latest session. The index opened strongly with an “Upside Gap”, hitting a high of 1,588 pts before narrowing its gains to 18 pts to close at 1,583 pts. Consequently, a “Bullish Harami” formation appeared – an early indication that the index is attempting to mark an interim low thus opening the door for a deeper rebound to take place. However, to confirm this bullish price reversal formation, we believe the index has to cross above the 1,595 pts resistance point in the coming sessions. Until this happens, the index remains firmly trading within the correction phase that started from Dec 2020, which has formed a downward channel. 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.

The immediate support is revised to 1,574 pts, followed by 1,545 pts – the low of 11 Nov 2020. Conversely, the resistance points are revised to 1,588 pts – the latest high, followed by 1,595 pts.

Source: RHB Securities Research - 3 Feb 2021