Maintain short positions. The FKLI experienced a negative price reversal as it failed to defend its opening hour’s positive trading tone that saw the index reach a high of 1,592 pts. From then. the index slid lower for the remaining of the session, hitting a low of 1,572.5 pts, before closing at 7 pts softer at 1,575 pts – marginally above the 1,574 pts support level. The negative performance has invalidated the previous session’s “Bullish Harami” formation. Towards the downside, should the said support fail to hold, the risk for the index to retest the 1,554-pt support or even the 200- day SMA line would be high. All in, the index remains trading in a multi-week correction structure (as redrawn in the chart) that started from Dec 2020’s high.

We recommend that traders stay in short positions. We initiated these at 1,579 pts, the closing level of 18 Feb. To manage risks, a stop-loss can be placed above 1,600 pts.

Support levels are maintained at 1,574 pts, followed by 1,554 pts. Towards the upside, the immediate resistance is maintained at 1,600 pts, followed by 1,610 pts.

Source: RHB Securities Research - 23 Feb 2021