Stay short, with a new trailing-stop set above the 1,660.50-pt level. The FKLI ended lower to form a black candle last Friday. It declined 5 pts to close at 1,650.50 pts, off its high of 1.653.50 pts and low of 1.648.50 pts. As seen in the chart, the index has marked a lower close vis-à-vis the previous session, which implies that the bears are still in control of the market. Technically speaking, the bearish sentiment would remain intact as long as the index does not recoup the losses from 24 Jul’s long black candle. Overall, we keep our bearish view on the index’s outlook.

As seen in the chart, we are now eyeing the immediate resistance level at 1,660.50 pts, determined from the high of 24 Jul’s long black candle. The next resistance is maintained at the 1,700-pt psychological mark. Towards the downside, the immediate support level is seen at 1,633.50 pts, obtained from 17 Jun’s low. Meanwhile, the next support would likely be at 1,613 pts, which was the high of 21 May.

To re-cap, on 15 Jul, we initially recommended traders to initiate short positions below the 1,668-pt level. We continue to advise them to stay short for now, while setting a new trailing-stop above the 1,660.50-pt threshold. This is in order to lock in part of the profits.

Source: RHB Securities Research - 29 Jul 2019