Maintain short positions. The FKLI ended the latest session on a neutral tone, as it continued to struggle to overcome the immediate resistance of 1,740 pts. Intraday, the index traded sideways between 1,731 pts and 1,739.5 pts, before ending marginally lower by 1.5 pts at 1,735.5 pts. The neutral session set in after the index was rejected from the said immediate resistance in the prior session, with the overall negative technical landscape remaining valid until the said immediate resistance is taken out decisively. Hence, we maintain our negative trading bias.

As there are no price actions to confirm the end of the weak bias, we continue to recommend that traders keep to short positions – which we initiated at 1,737 pts, or 10 Oct’s closing level. For risk management purposes, a stop loss can be placed above 1,779 pts.

The immediate support is set at 1,686 pts, the low of 11 Oct. The second support is at the 1,655-pt level, the low of 28 June. Moving up, 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 - 19 Oct 2018