Bears are still in clear control; maintain short positions. The FKLI ended the latest session on a negative note. At the closing, it eased 16.5 pts to close at 1,618.5 pts – which was also the session’s low. The negative session suggests the index is still struggling to establish, at the minimum, an interim low. Overall, the negative bias that started from the failed attempt to cross above the 1,700-pt resistance mark on 2 Jul, is still firmly in place. Additionally, the index is now trading below both the 50-day and 200-day SMA lines – a bearish indication. Hence, we keep to our negative trading bias.

While the Daily RSI is nearing an oversold reading, in the absence of price reversal signals, 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 1,660.50-pt mark.

The immediate support is expected to emerge at 1,613 pts, the high of 13 May. This is followed by 1,573 pts, the low of 14 May. On the other hand, the immediate resistance is set at 1,660.50 pts, the high of 24 Jul – followed by 1,700 pts, a round figure.

Source: RHB Securities Research - 5 Aug 2019