Maintain short positions, as the trend is still weak. The latest session witnessed the FKLI performing positively, as it formed a white candle and closed at 1,666.5 pts – a gain of 6.5 pts. The low and high of the day were recorded at 1,655 pts and 1,675 pts respectively. The positive session emerged after the daily RSI reached the oversold level of 24 in the prior session. However, this still does not provide sufficient technical evidence to suggest that a possible deeper rebound is in the making. For now, we look for an upside break of the 1,688-pt level to signal such a possibility. Until then, we keep our near-term negative trading bias.

In the absence of signs that a deeper rebound is in development, the overall negative price movements – which started after the failed attempt to break above the 200-day SMA line on 7 Jun – remains firmly in place, and we continue to recommend traders to keep to short positions. This was initiated at 1,732 pts, or the closing level of 18 Jun. To manage the risks, we set the trailing-stop to 1,688 pts, being the high of 27 Jun.

Immediate support is envisaged at 1,661 pts, the low of 19 Jan 2017. Breaking this could see market test 1,600 pts, or the next round figure. On the flip side, the immediate resistance is set at the 1,688-pt mark, the high of 27 Jun. This is followed by 1,735 pts, which was the low of 4 Jun.

Source: RHB Securities Research - 29 Jun 2018