Bears have the upper hand; maintain short positions. The FKLI continued to slide in the latest session. At the closing, the index eased 6.5 pts to settle at 1,637.5 pts, the low and high were registered at 1,634 pts and 1,648 pts. The weak performance indicates the index’s retracement leg is still developing – this is further supported by the fact that it is trading below both the 50-day SMA line, and the uptrend line (as drawn in the chart). While the daily RSI is nearing the oversold reading, until there are price actions to signal end to the retracement leg, we are keeping our negative trading bias. Towards the downside, we still expecting the said immediate support to be tested.

With the bias for the index to retest the said immediate support remains valid, 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 expected at 1,631.5 pts, or the low of 18 Dec 2018. The second support may emerge at 1,600 pts. On the other hand, the overhead resistance is expected at 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 - 28 Mar 2019