Maintain short positions as the retracement continues to develop. The FKLI slid below the previous immediate support of 1,600 pts yesterday. The intraday tone was negative as the index generally trended south for the entire session, moving from a high of 1,604 pts to settle at a low of 1,592.5 pts, indicating a decline of 15.5 pts. The weak performance suggests the retracement leg that started from the failed attempt to breach above the 1,729 pts is still valid. In the absence of positive price actions around the 1,600-pt level – which would indicate a possible end to the retracement – we maintain our negative trading bias.

As the bears are still charging ahead and there are no signs to indicate that an interim low has been established, we 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 1,550 pts, followed by 1,500 pts. In the meantime, we are now eyeing the immediate resistance at 1,609.5 pts, the low of 18 Apr. This is followed by 1,656.5 pts, the high of 26 Mar.

Source: RHB Securities Research - 14 May 2019