Maintain short positions as the index failed to hold above the 50-day SMA line. The FKLI slid from the 50- day SMA line in the latest session. It closed 6 pts lower to settle at 1,683.5 pts. Intraday tone was negative as it trended lower for the whole session, with the high and low posted at 1,694.5 pts and 1,681 pts. The inability of the index to hold above the said SMA line indicates that the bulls are still lacking strength to reverse the negative bias that set in, after the failed attempt to breach above the 1,729-pt resistance level recently. Hence, we are keeping our negative trading bias.

As there are no price signals to indicate the negative trend has reached an end, 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.

We are still expect the immediate support at 1,631.5 pts, or the low of 18 Dec 2018. This is 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 - 20 Mar 2019