Maintain short positions. The FKLI managed to reverse its earlier session’s loss to close 7 pts higher at 1,631.5 pts. The low and high were at 1,617 pts and 1,634.5 pts. The relatively sharp intraday reversal suggests the index’s technical rebound which started from the 18 Apr’s “Hammer” formation may still be extending. However, this rebound is still considered as a minor one, ie within the declining phase which started from the failed attempt to breach above the 1,729-pt level. Based on this, we keep to our negative trading inclination.

Until there are stronger price actions to indicate the bulls have taken control, 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.

Towards the downside, immediate support is expected to emerge at 1,600 pts. This is followed by 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 - 6 May 2019