Maintain short positions pending the signal of a stronger rebound. The FKLI softened 2.5 pts to settle at 1,598 pts yesterday. This was after it reached a low and high of 1,595 pts and 1,603.5 pts. The index has been moving around the 1,600-pt round figure in recent sessions – with the 1,613-pt being the resistance. For now, as long as the index is still capped by this resistance level, chances of it posting a stronger rebound should still be low. Further re-enforcing this negative bias is the fact that the index is still capped by the downtrend line (drawn in the chart). As such, we are keeping to our negative trading bias.

As the bulls have still not been able to take control of the price trend – 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 1,613-pt threshold.

Towards the downside, immediate support is still expected at 1,550 pts. This is followed by the 1,500-pt psychological level. Moving up, the immediate resistance is now at 1,613 pts, the high of 21 May. This is followed by 1,656.5 pts, the high of 26 Mar.

Source: RHB Securities Research - 28 May 2019