50-day SMA line marginal breached; maintain short positions. The FCPO ended 5.5 pts weaker in the latest session – trading range was confined between 1,676.5 pts and 1,687.5 pts. The closing level placed the index below the 50-day SMA line – albeit marginally. Broadly, the retracement leg that set in after the failed attempt to crack above the immediate resistance of 1,729 pts recently is still showing signs of progressing. The retracement has yet to reach an oversold level. Hence, we keep to our negative trading bias.

With the bears still showing clear dominance over the index’s price direction, we continue to recommend traders maintain short positions. These positions were initiated at 1,698 pts, or the closing level of 1 Mar. To manage risks, a stop-loss can be placed above 1,729 pts.

Towards the downside, the immediate support is still expected at 1,664 pts,or the low of 2 Jan. Breaking this may see market test 1,631.5 pts, the low of 18 Dec 2018. On the other hand, the immediate resistance is set 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 - 6 Mar 2019