Maintain short positions as the retracement leg is still in place. The FKLI performed positively in the latest session. At the closing, the index advanced 10 pts to settle at 1,655.5 pts. Trading happened in the range of 1,646 pts and 1,657 pts. While the positive session has again placed the index back above the 50-day SMA line, there is still lack of technical evidence to suggest that the retracement leg – which started from the failed attempt to cross the 1,700-pt immediate resistance of 2 Jul – has reached an interim low. Instead, price actions over recent sessions indicate there is a higher chance that the index is merely consolidating around the said SMA line before resuming its downward bias. Hence, we keep to our negative trading bias.

In the absence of a clear price reversal signal, 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.

The immediate support is set 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 - 26 Jul 2019