Maintain short positions until the immediate resistance is crossed. The FKLI formed a white candle and came close to testing the immediate resistance of 1,613 pts. The index settled at the session’s high of 1,612 pts, indicating an increase of 14 pts. If it manages to breach above the said immediate resistance in the coming sessions, this may point to a stronger rebound on the horizon. If this materialises, at the minimum, we are expecting the downtrend line (as drawn in the chart) to be tested. Pending this, we keep to our negative trading bias.

As the bulls have yet to signal a stronger rebound is developing – 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.

We are keeping the immediate support target at 1,550 pts. This is followed by the 1,500-pt psychological level. On the other hand, 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 - 29 May 2019