Maintain short positions. The FKLI formed a white candle in the latest session and at one point tested the recent high – 1,640.5 pts. The session saw the index reach a low and high of 1,626.5 pts and 1,645 pts, before ending 15 pts higher at 1,640 pts. For now, we are still taking the index’s ongoing rebound that started from 18 Apr’s “Hammer” formation as just a minor rebound within a negative trend. This negative bias is expected to remain in place until both the said recent high and the downtrend line (as drawn in the chart) are decisively breached. For now, we are keeping our negative trading bias.

Until the prospects for a deeper rebound are confirmed, we continue to recommend that traders stay 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 set at 1,600 pts. The following support is eyed at 1,550 pts. Conversely, 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 - 8 May 2019