No signal of a stronger rebound yet; stay short. The FKLI ended marginally lower by 1pt to close at 1,600.5 pts, with trading between 1,595.5 pts and 1,606.5 pts. The recent sessions’ price performance suggest that the index is still struggling to form a strong footing above 1,600 pts. For now, we still regard the rebound that started from the low of the 14 May’s “Piercing Line” formation as a minor one within the downtrend leg that started from the index’s failed attempt to cross above the 1,729-pt level. We maintain our negative trading bias

As the index is still firmly trading below the downtrend line (as drawn in the chart) – which limits the prospect of a stronger rebound taking place – we recommend that traders stay in short positions. These were initiated at 1,698 pts, the closing level of 1 Mar. To manage the risks, a stop-loss can be placed above the 1,646-pt threshold.

Immediate support is eyed at 1,550 pts. This is followed by the 1,500-pt psychological level. Moving up, the immediate resistance is pegged at 1,656.5 pts, ie the high of 26 Mar. This is followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 27 May 2019