Maintain short positions as the trend is still negative. The FKLI formed a black candle yesterday, which left it still below the downtrend line in the chart. The intraday tone was negative as the index generally trended lower for the whole session. The high and low were recorded at 1,640 pts and 1,623 pts, before closing at 1,624.5 pts, indicating a drop of 11.5 pts. The price rejection from the said downtrend line indicates that the negative bias that started from the failed attempt to breach above the 1,729-pt level is still in effect. The recent rebound – prior to the latest weak session – can be seen as a minor rebound within a weak trend. We maintain our negative trading bias.

As the negative price trend still shows signs of ending, 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 are keeping our immediate support target at 1,600 pts, followed by 1,550 pts. Meanwhile, the immediate resistance is set at 1,656.5 pts, or the high of 26 Mar. This is followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 3 May 2019