Bears continue to assert pressure; maintain short positions. The FKLI continued to ease yesterday, shedding 10.5 pts to settle at 1,659 pts. The intraday tone was negative as it generally trended lower for the entire session – the high and low were recorded at 1,668.5 pts and 1,656.5 pts. The index’s retracement leg that started from the failed attempt to cross above the 1,700-pt immediate resistance on 2 Jul is still in progress, and does not show any sign of ending yet. The weak bias would likely to stay in place as long as the index is still capped by the 200-day SMA line. Hence, we keep to our negative trading bias.

As the bears have firm control over the index, we continue to recommend that traders remain in short positions. We initiated these at 1,668, the closing level of 12 Jul. To manage risks, a stop-loss can be placed above the 1,700-pt mark.

Towards the downside, immediate support is set at 1,633.5 pts, the low of 17 Jun. The second support may emerge at 1,613 pts, the high of 13 May. Moving up, the immediate resistance is set at 1,700 pts, followed by 1,730 pts, near the high of 21 Feb.

Source: RHB Securities Research - 18 Jul 2019