Maintain short positions. The HSIF ended higher to form a white candle last Friday. It rose to a high of 28,765 pts during the intraday session, before ending at 28,726 pts for the day. Unsurprisingly, last Friday’s white candle should merely be viewed as bargain hunting activities following recent losses. On a technical basis, we think the near-term bearish sentiment stays intact as long as the HSIF does not recoup losses from 25-27 June’s black candles. Overall, we remain bearish view on the index’s near term outlook.

Judging from the outlook, the immediate resistance is seen at 29,453 pts, ie the high of 25 June. If this level is taken out, the next resistance would likely be at the 30,000-pt psychological mark. Towards the downside, the near-term support is anticipated at 28,149 pts, ie the previous low of 7 Dec 2017. This is followed by the 28,000- pt round figure.

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 is preferably set above the 29,453-pt threshold in order to secure part of the profits.

Source: RHB Securities Research - 2 Jul 2018