Stay short, with a trailing-stop set above the 26,206-pt resistance. The HSIF ended higher to form another white candle last Friday. It rose to a high of 25,733 pts during the intraday session, before ending at 25,632 pts for the day. Unsurprisingly, last Friday’s white candle should merely be viewed as a technical rebound following the recent losses. Currently, we think the bears may continue to control the market as long as the HSIF does not recoup the losses from 9-13 Aug’s black candles. Overall, we keep our bearish view on the HSIF’s outlook.

As seen in the chart, we anticipate the immediate resistance level at 26,206 pts, ie the high of 9 Aug. If the price climbs above this level, look to 27,660 pts – which was the high of 2 Aug – as the next resistance. Towards the downside, we are eyeing the immediate support level at 24,791 pts, obtained from 15 Aug’s low. Meanwhile, the next support is seen at 24,457 pts, determined from the previous low of 29 Oct 2018.

Hence, we advise traders to stay short, in line with our initial recommendation to have short positions below the 28,109-pt level on 1 Aug. In the meantime, a trailing-stop can be set above the 26,206-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 19 Aug 2019