Stay short while setting a trailing-stop above the 29,860-pt resistance. The HSIF formed a “Doji” candle yesterday. It settled at 28,945 pts, off its high of 29,033 pts and low of 28,476 pts. Still, the appearance of yesterday’s “Doji” candle merely indicates that sellers may be taking a pause after the recent plunge. Since the 21-day SMA line is still pointing downwards, this indicates that the near-term bearish sentiment stays intact. Overall, we believe the downside swing that started off 8 June’s long black candle would likely continue in the coming sessions.

Based on the daily chart, we are eyeing the immediate resistance at 29,860 pts, situated near the midpoint of 19 Jun’s long black candle. The next resistance is maintained at 31,544 pts, obtained from the high of 7 June. Towards the downside, the near-term support is seen at 28,149 pts, ie the previous low of 7 Dec 2017. This is followed by the 28,000-pt psychological spot.

Hence, we advise traders to maintain short positions, given that we initially recommended initiating short below the 30,800-pt level on 18 Jun. A trailing-stop can be set above the 29,860-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 27 Jun 2018