Maintain short positions. The FKLI experienced a small scale V-shaped pattern in the latest trading. The index failed to sustain its earlier session’s positive opening as selling pressure emerged, driving it to a low of 1,576.5 pts. However, towards the final two hours, the index scaled higher, ending the day 16 pts higher at 1,593 pts. Intraday price actions suggest the index is attempting to extend its rebound that started from 29 Jan’s low of 1,554 pts. The rebound hit a wall in the previous session after reaching a high of 1,602 pts. We continue to believe the index is developing a countertrend rebound within the multi-week downtrend line (as drawn in the chart). Towards the upside, should the index close above 1,595 pts, this counter-trend rebound may extend further. Until this happens, we are keeping 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 is revised to 1,585 pts, followed by 1,574 pts. Conversely, the immediate resistance is now eyed at 1,595 pts, followed by 1,605 pts.

Source: RHB Securities Research - 5 Feb 2021