Maintain short positions until there are clearer signs that bulls have established control. The FKLI formed a white candle in the latest session and managed to close slightly above the 50-day SMA line. The session’s low and high were registered at 1,684 pts and 1,693.5 pts, before ending at 1,690.5 pts and implying a gain of 9 pts. Nevertheless, we are keeping our view that the index’s negative bias, which had set in from the 2 Jan’s black candle, is still firmly in place. For the bias to change to positive, the bulls have to recoup the high of 31 Dec 2018 at 1,703 pts and breaking this mark would also indicate a decisive upside break of the said SMA line. Until this happens, we keep to our negative trading bias.

As there are no clear indications that the bulls have returned to the driver’s seat, 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.

We maintain the immediate support at 1,631.5 pts, the low of 18 Dec. The second support is expected at the 1,600-pt mark. Moving up, 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 - 22 Jan 2019