Maintain short positions. The HSIF ended on another positive candle on Monday. It closed at 25,854 pts, off its high of 26,000 pts and low of 25,545 pts. However, based on the current technical landscape, market sentiment is considered negative as the index has continued to stay below the downtrend line drawn in the chart. This line comprised connecting multiple highs of 26 Jul 2018, 30 Aug 2018, and 26 Sep 2018. Meanwhile, the 21-day SMA line is likely to turn lower, suggesting that the downward momentum is not over yet. Overall, the market trend remains negative.

According to the daily chart, we anticipate the immediate resistance at 26,600 pts, set near the downtrend line above. The next resistance would likely be at 28,037 pts, ie the high of 26 Sep 2018. On the other hand, we maintain the immediate support at the 25,000-pt round figure, situated near the low of 13 Nov 2018 as well. The next support is seen at 24,457 pts, which was the previous low of 29 Oct 2018.

Hence, we advise traders to stay short, since we initially recommended initiating short below the 25,940-pt level on 28 Dec 2018. In the meantime, a stop-loss can be set above the downtrend line at the 26,600-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 2 Jan 2019