Market retracement will likely continue. Today, we analyse the HSIF’s longer-term trend based on its weekly chart. Last week, the HSIF formed a third consecutive week of black candle – an indication of persistent selling momentum. Last week’s lower close can be viewed as a continuation of the market retracement that started in early-Feb 2018. From a technical perspective, the market trend is considered negative, as the HSIF has marked a breakdown from the 2-year uptrend drawn in the chart. This also suggests that the bears may possibly be extending their downside momentum in the coming sessions.

As seen in the weekly chart, we anticipate the immediate resistance at the 30,000-pt psychological mark. If this level is taken out, the next resistance is seen at the 33,516-pt historical high. Towards the downside, we are eyeing the immediate support at 27,244 pts, ie the previous low of 29 Sep 2017. Meanwhile, the next support would likely be at 25,110 pts, determined from the low of 7 July 2017.

Overall, we advise traders to stick to short positions as signs of a significant rebound have not emerged yet. For more details, please refer to our 2 Jul 2018 report.

Source: RHB Securities Research - 3 Jul 2018