“Bullish Engulfing” formation invalidated; maintain short positions. The FKLI ended the latest session on the weak side and in the process, invalidated the recent “Bullish Engulfing” formation – this suggests that the prospect for a stronger rebound is still weak. The session’s low and high were at 1,618 pts and 1,631.5 pts, before closing at 1,622 pts, indicating a decline of 8 pts. The invalidation of the said “Bullish Engulfing” formation implies the retracement that started from the failed attempt to break above the 1,729 pts level is still in place. While we note that the daily RSI has been flashing out a positive divergence reading, until there is a positive price signal, we keep to our negative trading bias.

With no signal to suggest the bears have ceased control over the price trend, 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.

The immediate support is set at 1,600 pts. This is followed by 1,550 pts. On the other hand, the immediate resistance is eyed at 1,656.5 pts, or the high of 26 Mar. This is followed by 1,694.5 pts, or the high of 19 Mar.

Source: RHB Securities Research - 18 Apr 2019