Stay short, with a new trailing-stop set above the 25,654-pt level. The HSIF formed another white candle yesterday. It settled at 25,342 pts, off the session’s low of 24,858 pts. However, we think the downside move is not over yet, as the index continues to hover below the declining 21-day SMA line. Yesterday’s white candle was the result of a technical rebound following recent losses, in our view. On a technical basis, the bearish sentiment remains intact as long as the HSIF does not recoup more than 50% of the losses from 23 Oct’s long black candle. Overall, we keep our bearish view on the HSIF’s outlook.

Based on the daily chart, we are now eyeing the immediate resistance at 25,654 pts, situated near the midpoint of 23 Oct’s long black candle. The next resistance is seen at 27,175 pts, ie the high of 4 Oct. Towards the downside, the immediate support is anticipated at 24,457 pts, obtained from the low of 29 Oct. If this level is taken out, the next support is maintained at the 24,000-pt psychological mark.

To recap, on 3 Oct, we initially recommended traders to initiate short positions below the 27,400-pt level. We continue to advise staying short for now, while setting a new trailing-stop above the 25,654-pt threshold. This is to lock in a larger part of the profits.

Source: RHB Securities Research - 2 Nov 2018