Long positions closed-out, short positions are recommended. While it managed to recoup most of its losses towards the end of the latest session, the FKLI ended marginally lower by 1.5 pts at 1,698 pts. The low and high were recorded at 1,690 pts and 1,698.5 pts. The index has been retracing deeper than initial expectations in recent sessions, after it failed to cross the 1,729-pt resistance mark recently. This signals a price rejection from the said resistance. Towards the downside, the index may retest the 50-day SMA line. As such, we switch our trading bias to negative.

Our previous long positions, initiated at 1,707.5 pts, or the closing level of 19 Feb, were closed out in the latest session. As the risk for the index to retrace further has increased, we initiate short positions at the latest closing level. To manage risks, a stop-loss can be placed above 1,729 pts.

The immediate support is expected at 1,664 pts, the low of 2 Jan. Breaking this may see market test 1,631.5 pts, the low of 18 Dec 2018. Conversely, the immediate resistance is pegged at 1,729 pts, the high of 8 Nov. This is followed by 1,749.5 pts, the high of 17 Oct 2018.

Source: RHB Securities Research - 4 Mar 2019