Stay short while setting a stop-loss above the 27,123-pt resistance. The HSIF formed another white candle yesterday. It settled at 27,026 pts, off its high of 27,141 pts and low of 26,554 pts. Based on the current technical landscape, yesterday’s white candle can be viewed as a result of bargain-hunting activities following the recent losses. Technically, we believe the bears may continue to control the market as long as the HSIF does not recoup the losses from 20-21 Nov’s black candles. Overall, we remain negative on the index’s outlook.

As seen in the chart, we maintain the immediate resistance level at 27,123 pts, ie the high of 20 Nov. The next resistance would likely be at 27,949 pts, determined from the high of 8 Nov’s “Bearish Engulfing” pattern. On the other hand, the immediate support level is seen at 26,178 pts, obtained from the low of 14 Nov. Meanwhile, the next support is anticipated at 25,507 pts, which was the previous low of 10 Oct.

Therefore, we advise traders to maintain short positions, given that we previously recommended initiating short below the 26,630-pt level on 22 Nov. A stop-loss can be set above the 27,123-pt mark in order to minimise the risk per trade.

Source: RHB Securities Research - 26 Nov 2019