Negative trend persists, maintain short positions. The FKLI closed on a negative note yesterday. That said, it also staged an intraday rebound, where it pulled away from the intraday low of 1,638.5 pts to a high of 1,652 pts, before shedding 5 pts to close 1,649.5 pts. The weak session continues to indicate there is no reversal signal – indicating the multi-month downtrend is still firmly in place. We also maintain that, for now, the index needs to breach above the downtrend line (drawn in the chart) for it to stage a deeper rebound. Until this happens, we stick to our negative trading bias.

In the absence of a price reversal signal which could mark an end to the weak price trend, we recommend that traders keep to short positions. These were initiated at 1,647 pts, the closing level of 17 Dec. For risk management purposes, a stop-loss can be placed above 1,706.5 pts.

Immediate support is set at the 1,600-pt mark, a round figure. This is followed by 1,550 pts. Meanwhile, the immediate resistance is now at 1,706.5 pts, the high of 27 Nov. This is followed by 1,729 pts, the high of 8 Nov.

Source: RHB Securities Research - 21 Dec 2018