Maintain short positions; no confirmation that bulls have regained control. The FKLI formed an “Bearish Engulfing” yesterday, after failing again to capture the immediate resistance mark of 1,703 pts. It generally trended lower, being unable to sustain the earlier session’s positive momentum. The high was posted at 1,706 pts, and the index closed at the session’s low of 1,693 pts, indicating a decline of 8 pts. As mentioned, this resistance level needs to be captured at the closing to signal the rebound that started from the low of 1,631.5 pts on 18 Dec 2018 is ready to continue. Until this materialises, we keep to our negative trading bias.

As the bulls are still not able to wrest control of the price trend, traders should remain in 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 set at 1,631.5 pts, the low of 18 Dec. This is followed by the 1,600-pt mark. On the other hand, the immediate resistance is still expected 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 - 29 Jan 2019