Early sign of reversal; maintain short positions  provided that the 24,574-pt level is not violated at the closing. The HSIF formed a positive  candle yesterday. It ended at 24,450  pts, off the session’s high of 24,569 pts and  low of 24,233  pts. Still, we  believe  the  selling  interest  is  not  over  yet,  given  that  the  index  continues  to  stay  below  the  10-day  MAV  line.  A yesterday’s candle failed to recoup  all  the losses created in the previous session,  this  suggests  that the negative outlook remains intact. With the declining 10-day MAV line, the negative sentiment has been enhanced.

Based on the daily chart, the immediate resistance level is  seen  at 24,574 pts, ie  situated near the previous high of 11 Feband the  10-day MAV line.  The crucial resistance level will likely be at the 25,000-pt psychological mark, which is also near the multiple  highs of 26-28 Jan and 5 Feb. On the other hand, we are eyeing the near-term support level at 23,604 pts, obtained from the previous low of 19 Jan.

On 12 Feb, we advised traders to initiate short positions below the 24,574-pt level.  For now, it is advisable for them to stay short while setting a stop-loss above the 24,574-pt threshold as well. We also notice an  upside  development in the form of a  bullish  reversal  sign,  following  the  “Piercing  Line”  pattern.  However,  a  close  above  the  24,574-pt  level  is  needed  to confirm the return of the bulls.

Source: RHB