Maintain short positions as the bulls still failed to decisively crossed the immediate resistance. The FKLI formed a black candle in the latest trading after failing to sustain the early positive momentum, which saw it briefly breach the immediate resistance of 1,740 pts. The index generally trended lower during the session, from a high of 1,749.5 pts to a low of 1,733.5 pts, before closing marginally higher by 1 pt at 1,737 pts. As mentioned, in order for the bulls to wrest the control from the bears, the said immediate resistance needs to be taken out decisively. The failure of the index to sustain above this mark suggests the possibility of a price rejection. Hence, we maintain our negative trading bias.

As the index is rejected from the said immediate resistance in the latest trading, we continue to recommend that traders keep to short positions – which we initiated at 1,737 pts, 10 Oct’s closing level. For risk management purposes, a stop loss can be placed above 1,779 pts.

We peg the immediate support at 1,686 pts, the low of 11 Oct. This is followed by 1,655-pt level, the low of 28 June. On the other hand, the immediate resistance is at 1,740 pts, or 20 Jul’s low. This is followed by 1,779 pts – the latest session’s high.

Source: RHB Securities Research - 18 Oct 2018