Maintain short positions. Yesterday, the HSIF’s downward momentum continued as expected after it formed another black candle. It closed at 28,046 pts, after oscillating between a high of 28,487 pts and low of 27,928 pts. From a technical viewpoint, the near-term downside move is likely to continue, as the index has closed below the immediate 28,149-pt support mentioned previously. As the HSIF recorded its lowest close in nearly nine months, this indicates that the downside swing that started from 8 Jun’s long black candle may be continuing. Overall, we keep our bearish view on the HSIF’s near-term outlook.

As seen in the chart, the immediate resistance level is seen at 29,047 pts, ie the high of 27 Jun’s long black candle. Meanwhile, the next resistance would likely be at the 30,000-pt psychological mark. Towards the downside, the immediate support level is now anticipated at 27,775 pts, which was the low of 3 Jul. If this level is taken out, look to 27,244 pts – obtained from the previous low of 29 Sep 2017 – as the next support.

Hence, we advise traders to maintain short positions, since we had originally recommended initiating short below the 30,800-pt level on 18 Jun. A trailing-stop can be set above the 29,047-pt threshold in order to secure part of the profits.

Source: RHB Securities Research - 5 Jul 2018