Maintain short positions as the bears are still in control. The FKLI formed a black candle to settle 13 pts weaker at 1,645.5 pts (session’s low). The intraday tone was negative, as the index generally trended lower for the whole session, with the high registered at 1,660.5 pts. The closing level placed the index in the support zone that consisted of the 50- day SMA line, and immediate support of 1,633.5 pts. In the absence of a clear price reversal signal from the said support zone to suggest that an interim low is in place, we keep to our negative trading bias.

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

We are still eying the immediate support to emerge at 1,633.5 pts, the low of 17 Jun. This is followed by 1,613 pts, the high of 13 May. On the other hand, 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 - 25 Jul 2019