Maintain short positions until stronger rebound is confirmed. The FKLI performed positively in the latest session. At the closing, it added 7 pts to settle at 1,658.5 pts – the low and high were recorded at 1,654 pts and 1,661 pts. The positive session took place near the 50-day SMA line – suggesting a possible re-emergence of the bulls. However, based on the daily chart, further positive price actions are still needed to confirm that the negative bias – which started from the failed attempt to breach above the immediate resistance of 1,700 pts on 2 Jul – has indeed reached an end. Hence, we keep to our negative trading bias.

Until a price reversal is confirmed, 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, we are keeping the immediate support target at 1,633.5 pts, the low of 17 Jun. This is followed by 1,613 pts, the high of 13 May. Moving up, the immediate resistance is set at 1,700 pts. This is to be followed by 1,730 pts, near the high of 21 Feb.

Source: RHB Securities Research - 24 Jul 2019