Initiate short positions below the 28,109-pt level. The HSIF formed a black candle yesterday. It lost 367 pts to close at 27,757 pts, off the session’s high of 28,109 pts and low of 27,632 pts. From a technical perspective, the index closed below the 28,052-pt support mentioned previously and hit its 5-week low, implying that sentiment has turned negative. This can be viewed as a continuation of sellers extending the downside swing from the “Shooting Star” pattern that was formed on 4 Jul. Yesterday’s closing also triggered our trailing-stop, which we had previously set at the 28,052-pt threshold. 

Presently, the immediate resistance is seen at 28,109 pts, ie 31 Jul’s high. The crucial resistance is anticipated at 29,080 pts, set at the high of 4 Jul’s “Shooting Star” pattern. To the downside, we are eyeing the near-term support at 26,907 pts, ie the low of 17 Jun. This is followed by 26,505 pts, which was the previous low of 4 Jun.

Thus, we advise traders to initiate fresh short positions below the 28,109-pt level. A stop-loss can be set above the 29,080-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 1 Aug 2019