Maintain short positions, until the index closes above the trailing-stop. The FKLI formed a white candle to close 7 pts higher at 1,558 pts, after it recorded a low and high of 1,552.5 pts and 1,560.5 pts. The positive session came after the index tested the 1,550-pt immediate support level in the previous two sessions. However, to recap, we are of the view that it has to cross above 1,558 pts to signal that a stronger rebound could develop. The latest closing did not produce the necessary positive price signal, which indicates that the downward bias – which resumed on 2 Jul on the failed attempt to breach the 1,700-pt level – is still intact. We maintain our negative trading bias.

As the bulls failed to take over the price trend conclusively, traders should remain 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 1,558-pt level.

We are keeping the immediate support at the 1,550-pt mark, followed by 1,500 pts. Moving up, the immediate resistance target is set at 1,573, the low of 14 May. This is followed by the 1,600-pt level.

Source: RHB Securities Research - 14 Oct 2019