Maintain short positions as there is still no sign of a rebound. The FKLI formed a black candle to settle 24 pts lower at 1,620.50 pts yesterday. The intraday tone was weak as the index generally slid lower for the entire session, while the high and low were at 1,644 pts and 1,619 pts. The weak session suggests the current phase of retracement – which started from the failed attempt to break above 1,729 pts – is still in place. This is despite the daily RSI still flashing out an oversold reading. Consequently, a short-term downtrend line (as drawn in the chart) has formed. For now, as long as the index is still capped by the said downtrend line, we maintain our negative trading bias.

As the trend remains bearish, traders should remain in 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 1,646 pts.

We keep our immediate support at 1,600 pts. Breaking this may see the market test 1,550 pts. On the other hand, the immediate resistance is set at 1,656.5 pts, the high of 26 Mar. This is followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 12 Apr 2019