Stay short provided the 28,334-pt resistance is not violated at closing. The HSIF formed a white candle yesterday. It settled at 28,204 pts, off the session’s low of 27,701 pts and high of 28,234 pts. Despite this, we maintain our near-term negative sentiment, as the index is still trading below the 28,334-pt resistance mentioned previously. As the bearishness of 2 Aug’s “Long Black Day” candle has not been cancelled, this shows that the near-term downside swing stays intact. Overall, we remain bearish on the HSIF’s near-term outlook.

Based on the daily chart, we are eyeing the immediate resistance at 28,334 pts, ie the high of 2 Aug’s “Long Black Day” candle. The next resistance is anticipated at 29,113 pts, determined from the high of 26 Jul. To the downside, we now anticipate the immediate support at 27,444 pts, which was the low of 3 Aug. Meanwhile, the next support is maintained at 27,244 pts, ie the previous low of 29 Sep 2017.

Thus, we advise traders to stay short, given that we had originally recommended initiating short below the 30,800- pt level on 18 Jun. At the same time, a trailing-stop can be set above the 28,334-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 8 Aug 2018