Maintain short positions. Last Friday saw the FKLI end in the neutral position, after rebounding from a weak early session and at one point, testing the immediate resistance of 1,700 pts. The session’s low and high were posted at 1,677 pts and 1,701.5 pts, before closing marginally lower by 2.5 pts at 1,690 pts. Given that the index was not able to recapture the said immediate resistance, this suggests the negative bias is firmly intact. An upside break from this mark would likely signal that a possible deeper rebound is developing. Until that happens, we keep to our nearterm negative trading bias.

In the absence of a clear price rebound signal – despite the daily RSI has reached an oversold level of 28.3, the index’s retracement since the failed attempt to break above the 200-day SMA line on 7 Jun is still firmly valid. On this bias, we still recommend that traders keep to short positions – which we initiated at 1,732 pts (the closing level of 18 Jun). To manage risks, a trailing-stop can be set at the breakeven level.

The immediate support is set at 1,661 pts, which is the low of 19 Jan 2017. The following support may be found at 1,600 pts, the next round figure. On the flip side, the immediate resistance is set at the 1,700-pt mark. This is followed by 1,735 pts, the low of 4 Jun.

Source: RHB Securities Research - 25 Jun 2018