Maintain short positions. After posting three black candles in a row, the HSIF ended higher to form a white candle yesterday. It rose to a high of 26,705 pts during the intraday session, before ending at 26,682 pts for the day. Unsurprisingly, yesterday’s white candle should merely be viewed as a technical rebound following the recent losses. We think the bears may continue to control the market as long as the HSIF does not recoup more than 50% of the losses from 13 Nov’s long black candle. Overall, we keep our bearish view on the HSIF’s outlook.

According to the daily chart, we maintain the immediate resistance level at 26,776 pts, ie near the midpoint of 13 Nov’s long black candle. If a breakout arises, look to 27,949 pts – which was the high of 8 Nov’s “Bearish Engulfing” pattern – as the next resistance level. On the other hand, the near-term support level is seen at the 26,000-pt psychological mark. This is followed by 25,507 pts, determined from the previous low of 10 Oct.

Therefore, we advise traders to maintain short positions, since we had originally recommended initiating short below the 27,400-pt level on 12 Nov. In the meantime, a trailing stop set above the 26,776-pt threshold is advisable in order to lock in part of the profits.

Source: RHB Securities Research - 19 Nov 2019