Maintain short positions as the bulls were not able to engineer a bounce. The FKLI ended the latest session marginally lower by 1 pt at 1,644 pts after it failed to sustain the earlier session’s positive tone. The high and low were posted at 1,641.5 pts and 1,656.5 pts. The inability of the index to post a rebound indicates the bulls are lacking the strength to wrest control from the bears. Overall, the retracement phase that started from the recent high of 1,729 pts is still not showing signs of reaching an end. Maintain negative trading bias until signs of rebound emerge.

Based on the index’s price trajectory, we maintain our expectation for the 1,631.5 pts to be re-tested, 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 now be placed above 1,694.5 pts.

The immediate support is set at 1,631.5 pts, or the low of 18 Dec 2018. Breaking this may see the market fall back to 1,600 pts. Moving up, the overhead resistance is pegged at 1,694.5 pts, the high of 19 Mar. This is followed by 1,729 pts, the high of 8 Nov.

Source: RHB Securities Research - 27 Mar 2019