Maintain short positions until bulls signal a stronger rebound. The FKLI formed a white candle to close the latest session 9 pts higher at 1,596.5 pts – still below the 1,600-pt round figure. The session’s trading range was between 1,585.5 pts and 1,599 pts. Despite the positive showing, we are still of the view that the index’s negative trend is firmly intact. Towards the downside, we see a high possibility of the immediate support of 1,573 pts being tested. For this bearish bias to reverse towards the upside, the index has to cross above the immediate resistance of 1,621.5 pts. Until then, we are keeping our negative trading bias.

As we are not seeing indications that a stronger rebound is in the process of developing, traders are recommended to stay in short positions. We initiated these at 1,668 pts, the closing level of 12 Jul. To manage risks, a stop-loss can now be placed above the 1,621.5-pt mark.

We are still eying the immediate support at 1,573 pts, the low of 14 May. This is followed by the 1,550-pt mark. On the other hand, the immediate resistance is set at 1,621.5 pts, the high of 9 Aug. This is followed by 1,660.5 pts, the high of 24 Jul

Source: RHB Securities Research - 30 Aug 2019