Maintain short positions as there is no confirmation of reversal yet. The FKLI settled 3.5 pts lower at 1,581 pts. The session’s trading range was between 1,580 pts and 1,589.5 pts. The weak session means the 7 Sep’s “Bullish Harami” is still unconfirmed – by extension this implies the negative bias that resumed on the 2 Jul’s failed attempt to cross the 1,700-pt level, is still in place. Confirmation of the said “Bullish Harami” formation would happen should the index manage to cross the 1,600-pt level. Until this happens, we stay with our negative trading bias.

As the bears are still showing control over the price trend, 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 1,600-pt mark.

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

Source: RHB Securities Research - 30 Sept 2019