Stay short while setting a stop-loss above the 1,706-pt resistance. The FKLI formed a black candle on Monday. It declined 6 pts to close at 1,686 pts after oscillating between a high of 1,695 pts and low of 1,685.50 pts. Based on the current outlook, we maintain our negative view, as the index has remained below the recent high of the 1,706-pt resistance mentioned previously. Technically, as long as the bearishness of 28 Jan’s “Bearish Engulfing” pattern is not nullified, this shows the downside swing is still in effect. As such, we believe the bears are in control of the market.

Based on the daily chart, we are eyeing the immediate resistance at 1,706 pts, which was the high of the 28 Jan’s “Bearish Engulfing” pattern. The next resistance is seen at 1,729 pts – this was determined from the high of 8 Nov 2018. Towards the downside, we anticipate the immediate support at 1,631.50 pts, ie the previous low of 18 Dec 2018. Meanwhile, the next support is maintained at the 1,600-pt psychological mark.

As a result, we advise traders to maintain short positions, given that we initially recommended initiating short below 1,664.50 pts on 3 Jan. At the same time, a stop-loss set above the 1,706-pt threshold is preferable to minimise the risk per trade.

Source: RHB Securities Research - 7 Feb 2019