Stay short provided that the 28,755-pt threshold is violated at the closing. The HSIF formed a black candle yesterday. It rose to a high of 29,013 pts during the intraday session, before ending at 28,650 pts for the day. Based on the current technical landscape, buying momentum is still considered weak, as the index has not closed above the 28,755-pt resistance mentioned previously. Again, technically speaking, as long as losses from 3-4 Jul’s black candles are not recouped, we believe that sellers still have control over the market. Overall, we keep our bearish view over the near term

According to the daily chart, we are eyeing the immediate resistance at 28,755 pts, which was the high of 3 Jul. The next resistance would likely be at the 30,000-pt psychological spot. On the other hand, the near-term support is seen at 27,720 pts, ie the low of 5 Jul. This is followed by 27,244 pts, determined from the previous low of 29 Sep 2017.

Therefore, we advise traders to maintain short positions, given that we recommended initiating short below the 30,800-pt level on 18 Jun. A trailing-stop can be set above the 28,755-pt threshold in order to lock in part of the gains.

Source: RHB Securities Research - 11 Jul 2018