Maintain short positions as the bears are still in firm control. The FKLI was under the bears’ control in the latest trading. The index generally trended lower throughout the session, from a high of 1,694 pts to a low of 1,674.5 pts, before ending 20.5 pts lower at 1,675 pts. The weak session indicates that the bullish ‘Piercing Line” formation in the previous session is still unconfirmed. The chances for the index to pose a deeper rebound or total price reversal is still low at the juncture; despite its daily RSI reaching an oversold mark recently. As a trend, the negative bias that set in after the index was rejected from the 200-day SMA line of 10 Oct, is still firmly in place.

With no positive follow-up from the bulls to signal a possible deeper price rebound, 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 1,749.5 pts

The immediate support is set at 1,655-pt level, the low of 28 June. The second support is at 1,600-pt mark, a round figure. The overhead resistance is set at 1,749.5 pts, or the high of 17 Oct. This is followed by 1,779 pts, which was the high of 10 Oct.

Source: RHB Securities Research - 29 Oct 2018