Stay short, with a trailing-stop set above the 29,013-pt resistance. The HSIF formed a “Doji” candle last Friday. It settled at 28,729 pts, off its high of 28,836 pts and low of 28,587 pts. Based on the current technical landscape, buying momentum is still considered weak, as the index has not closed above the 29,013-pt resistance mentioned since three weeks ago. Again, technically speaking, as long as the bearishness of 10 Jul’s “Shooting Star” pattern is not negated, we believe that sellers still have control over the market. Overall, we maintain a bearish view on the HSIF’s near-term outlook.

As seen in the chart, we are eyeing the immediate resistance level at 29,013 pts, which was the high of 10 Jul’s “Shooting Star” pattern. If this level is taken out, the next resistance is anticipated at the 30,000-pt psychological mark. Towards the downside, the immediate support level is seen at 27,720 pts, obtained from the previous low of 5 Jul. The next support is maintained at 27,244 pts, ie the previous low of 29 Sep 2017.

Hence, we advise traders to stay short, since we had originally recommended initiating short below the 30,800-pt level on 18 Jun. In the meantime, a trailing-stop can be set above the 29,013-pt threshold in order to lock in part of the gains.

Source: RHB Securities Research - 30 Jul 2018