Maintain short positions as retracement still developing. The FKLI shed 4 pts last Friday and closed at 1,675.5 pts, after oscillating between a low and high of 1,673 pts and 1,679.5 pts. The index’s retracement leg, which started from its recent failed attempt to break above the immediate resistance of 1,729 pts, is still in progress. Further supporting this is the fact that it has broken both the 50-day SMA and uptrend lines (formed from the low of 1,631.5 pts). We maintain a negative trading tone.

As there are no price actions to suggest the bulls are attempting a clear rebound, we continue to recommend that traders maintain short positions. These 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 should emerge at 1,664 pts, the low of 2 Jan. The second support is 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 - 11 Mar 2019