Maintain short positions. The FKLI shed just 1 pt to close at 1,802 pts, after oscillating between a low and high of 1,794 pts and 1,803 pts. While the index’s trend in recent weeks is increasingly biased towards a narrow consolidation around the 200-day SMA line (we are expecting a deeper retracement), a firm break above the high of 1,810.5 pts is needed to signal the resumption of the uptrend from the low of 1,655 pts on 28 Jun. Until this happens, we maintain our negative near-term trading bias.

As long as the 1,810.5-pt level is not firmly breached, the FKLI should still remain in consolidation mode, ie with a weak price bias. Hence, we continue to advise traders to maintain short positions. We initiated these positions at 1,775 pts, the closing level of 13 Aug. To manage risks, a stop-loss can be set above 1,810.5 pts.

Immediate support is pegged at 1,766.5 pts, the low of 31 Jul. The second support is at 1,740 pts, the low of 20 Jul. Towards the upside, the immediate resistance is set at 1,810.5 pts, the highs of 9 and 10 Aug. The following resistance is at 1,844.5 pts, the high of 23 May.

Source: RHB Securities Research - 27 Aug 2018