Maintain short positions as the bulls are still struggling. The FKLI was unsuccessful in its attempt to rebound in the latest session – it failed to keep to its earlier session’s gain (the high was posted at 1,685 pts), to close at the session’s low of 1,678.5 pts, indicating a decline of 2.5 pts. Broadly, the index’s retracement phase that started from the recent failed attempt to breach the immediate resistance of 1,729 pts is still developing. In the near-term, provided the index is still capped by the 50-day SMA line, the negative bias would remain in place. Hence, we maintain our negative trading tone.

As the technical picture suggests that the overall retracement leg is still developing, we continue to recommend traders to maintain short positions. These positions were initiated at 1,698 pts 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 set at 1,664 pts, the low of 2 Jan. The second support is pegged at 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 - 7 Mar 2019