Bears are still in control; maintain short positions. The index generally softened for the entire session yesterday. It dropped from a high of 1,682 pts to a low of 1,670.5 pts, before closing 7.5 pts lower at 1,672 pts. This close has again placed the index back below the 50-day SMA line. If there are follow-up negative price actions in the coming sessions, chances would be higher that it may retest the immediate support of 1,631.5 pts. Towards the upside, we maintain that the said SMA line needs to be recaptured decisively in order for the bulls to regain control. Based on these observations, we maintain our negative trading bias.

As the bias is still tilted towards a further retracement, 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.

Immediate support is eyed at 1,631.5 pts, the low of 18 Dec. The following support is at the 1,600-pt mark. On the other hand, the immediate resistance is set 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 - 17 Jan 2019