Rebound still not in sight, maintain short positions. Yesterday, the FKLI ended the session on the negative tone, as it closed 14.5 pts lower at 1,675.5 pts. The session saw the index drifted lower for most part of the session, from a high of 1,694 pts, to a low of 1,672 pts. The negative session set in after the index tested the 1,700-pt immediate resistance on last Friday – suggesting there was no positive follow-through, which is needed to signal a possible deeper rebound to develop. This is despite the daily RSI reaching the oversold level of 26.1. On this, we keep to our near-term negative trading bias.

Without a clear price signal to suggest the end to the retracement that has been in development since the failed attempt to break above the 200-day SMA line on 7 Jun, we continue recommending that traders keep to short positions – initiated at 1,732 pts (the closing level of 18 Jun). To manage risks, we revise the trailing-stop to 1,700 pts.

We maintain the immediate support set at 1,661 pts, which is the low of 19 Jan 2017. Breaking this may see market test 1,600 pts, the next round figure. On the upside, 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 - 26 Jun 2018