Still high possibility to retest the immediate support; maintain short positions. The FKLI was seen trying to break above 50-day SMA line in the latest session. It posted a high of 1,690.5 pts earlier in the session before losing some steam to close at 1,683.5 pts, indicating a gain of 9.5 pts. The index’s inability to cross the said SMA line decisively suggests the negative bias that started from the high of 1,703 pts on 31 Dec 2018 remains valid. Towards the downside, the index may retest the immediate support of 1,631.5 pts. Hence, we keep to our negative trading bias.

As the indications are still pointing towards the bulls lacking the strength to reverse the weak bias, we continue to recommend that traders maintain short positions. We initiated these at 1,664.5 pts, the closing level of 2 Jan. To manage risks, a stop-loss can be placed above 1,703 pts.

The index may find its immediate support at 1,631.5 pts, the low of 18 Dec. If this level gives way, the index may fall back to the 1,600-pt mark as the next support. On the other hand, the immediate resistance is at 1,703 pts, the high of 31 Dec 2018. This is followed by 1,729 pts, the high of 8 Nov.

Source: RHB Securities Research - 8 Jan 2019