Negative sentiment stays intact, stay short. The HSIF formed a positive candle yesterday. It closed at 27,858 pts, off its high of 27,971 pts and low of 27,602 pts. From a technical viewpoint, we maintain our negative view, as the index has marked a lower close vis-à-vis the previous session. Meanwhile, as long as the HSIF did not recoup the losses created by 9 May’s long black candle, this shows the downside swing is still in effect. Overall, we keep our bearish view on the index’s outlook.

Based on the daily chart, we are eyeing the immediate resistance at 28,798 pts, ie the high of 9 May’s long black candle. The next resistance is seen at 29,400 pts, situated near the midpoint of 6 May’s long black candle. Towards the downside, the immediate support is anticipated at 27,450 pts, which was the previous low of 8 Feb. The next support will likely be at the 27,000-pt psychological spot.

Therefore, we advise traders to stay short, in line with our initial recommendation to have short positions below the 29,400-pt level on 7 May. In the meantime, a trailing-stop can be set above the 28,798-pt threshold to lock in part of the profits.

Source: RHB Securities Research - 15 May 2019