Initiate short positions below the 30,800-pt level. The HSIF formed another black candle last Friday. It closed at 30,258 pts, after oscillating between a high of 30,576 pts and low of 30,220 pts. As the index posted a third consecutive black candle and breached below the 21-day SMA line, this indicates that market sentiment is turning negative. In addition, the 14-day RSI indicator slid below the 50 neutral point to flash a bearish reading at 43.47 pts, thereby enhancing the negative sentiment. Meanwhile, 14 June’s closing also triggered our trailing-stop, which we previously recommended at the 30,650-pt threshold.

According to the daily chart, we are now eyeing the immediate resistance at 30,800 pts, set near 8 Jun’s low and 14 Jun’s high. The next resistance is seen at 31,513 pts, determined from the high of 8 Jun’s long black candle. Towards the downside, the near-term support is anticipated at 29,847 pts and 29,575 pts, obtained from the previous low of 31 May and 7 May respectively.

Hence, we advise traders to initiate short positions below the 30,800-pt level. A stop-loss is preferably set above the 31,513-pt threshold in order to limit the risk per trade.

Source: RHB Securities Research - 18 Jun 2018