Maintain short positions as the bias is still negative. The FKLI added 6 pts to close at 1,689 pts, the low and high were at 1,688 pts and 1,694 pts. The positive session continued to place the index above the 50-day SMA line – which was under pressure in the prior session. However, looking at the broader picture, the negative bias that set in by the 29 Jan’s “Bearish Engulfing” formation is still firmly in place – and the risk for the index to retrace further is still high. This negative bias would be further enhanced if the said SMA line is breached towards the downside in the coming sessions. Based on these, we maintain our negative trading bias.

With the bears still in control over the price trend, 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, the stop-loss is revised to 1,706 pts.

Towards the downside, the immediate support is pegged at 1,631.5 pts, the low of 18 Dec 2018. The second support is eyed at the 1,600-pt mark. Moving up, the immediate resistance is revised to 1,706 pts, the high of the 28 Jan’s “Bearish Engulfing” formation. This is followed by 1,729 pts, the high of 8 Nov.

Source: RHB Securities Research - 4 Feb 2019