Maintain short positions pending confirmation of a rebound. The FKLI staged a strong comeback in the latest session. It reversed from a steep loss with the low of 1,573 pts, before rebounding to settle 10 pts higher at 1,602.5 pts – slightly above the previous immediate resistance of 1,600 pts. Consequently, a bullish “Piercing Line” formation has appeared. This positive formation is considered significant as it comes after the recent sharp decline, which pushed the index into a support zone of between 1,550 pts and 1,600 pts. However, in order to confirm that the low has been established, further positive price actions in the coming sessions are needed. Until we see signs of this, we are keeping to our negative trading bias.

Pending confirmation that the bulls have regained control over the price trend, we recommend that traders stay in short positions. These were initiated at 1,698 pts, or the closing level of 1 Mar. To manage risks, a stop-loss can be placed above 1,646 pts.

We are still keeping the immediate support target of 1,550 pts, followed by 1,500 pts. On the other hand, the immediate resistance is now 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 - 15 May 2019