Bearish sentiment remains unchanged; stay short. The HSIF formed a “Doji” candle yesterday. It settled at 26,711 pts, after hovering between a high of 26,828 pts and low of 26,578 pts throughout the day. From a technical viewpoint, we believe the bearish sentiment stays intact, as the index remains below the falling 21-day SMA line. Given that the index has marked a lower close vis-à-vis the previous sessions since 29 May, this would imply that the downside move is likely to continue in the coming sessions. As such, we believe sellers are still in control of the market.

As shown in the chart, we are eyeing the immediate resistance at 27,450 pts, ie near the highs of 28-29 May. The next resistance would likely be at 28,317 pts, determined from the high of 17 May. Towards the downside, the nearterm support level is maintained at 26,164 pts, which was the previous low of 14 Jan. This is followed by the 26,000- pt psychological spot.

Thus, 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. A trailing-stop can be set above the 27,450-pt mark in order to secure part of the gains.

Source: RHB Securities Research - 4 Jun 2019