Maintain short positions. The FKLI formed a white candle in the latest session. At the closing it added 9.5 pts to settle at 1,681.5 pts – while the low and high were recorded at 1,673.5 pts and 1,684 pts. Despite the positive session, the index was still unable to breach above the 50-day SMA line – which is crucial at this juncture to signal a change in control from the bears to the bulls. As long as the index is still capped by this SMA, the negative bias that was set in by the 2 Jan’s black candle would still be in place – as such, chances are high that it may retest the immediate support of 1,731.5 pts. Hence, we maintain our negative trading bias.

With the bulls still not showing 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.

Immediate support is maintained at 1,631.5 pts, the low of 18 Dec. This is followed by the 1,600-pt mark. Towards the upside, 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 - 18 Jan 2019