Maintain short positions. The FKLI formed a white candle yesterday and closed at 1,669 pts, indicating a gain of 12 pts. It also breached above the previous immediate resistance of 1,664 pts. The low and high were at 1,663.5 pts and 1,674 pts. That said, its latest positive performance has not negated the retracement leg that started from the failed attempt to break above 1,729 pts recently. This is supported by the fact that the index is still capped by the 50-day SMA. Until there are clearer price actions that suggest the retracement has ended, we maintain a negative trading tone.

As there are insufficient price signals to suggest the bulls have wrested control from the bears, 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.

Immediate support is maintained at 1,631.5 pts, the low of 18 Dec 2018, followed by 1,600 pts. Moving up, the immediate resistance is expected 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 - 13 Mar 2019