Maintain short positions until signs of a stronger rebound emerge. The FKLI ended the latest session 2 pts higher, at 1,593 pts, trading between 1,590 pts and 1,598 pts. As highlighted in our recent reports, for the index to stage a stronger rebound, it has to close above the 1,595 pts, the high of 4 Sept (to confirm the “Bullish Harami” formation). Until this happens, the index’s negative price trend, which resumed on the failed attempt to cross the 1,700-pt resistance mark on 2 Jul, is still considered intact. As such, we keep to our negative trading bias.

As the negative trend is still not showing signs of reaching an interim low, for a stronger rebound to develop, traders are recommended to stay in short positions. We initiated these at 1,668 pts, or the closing level of 12 Jul. To manage risks, a stop-loss can now be placed above the 1,595-pt mark, the latest session’s high.

We are keeping the immediate support target at 1,573 pts, ie the low of 14 May. This is followed by the 1,550-pt mark. Moving up, we maintain the immediate resistance target at 1,621.5 pts, or the high of 9 Aug. This is followed by 1,660.5 pts, ie the high of 24 Jul.

Source: RHB Securities Research - 10 Sept 2019