Bearish trend remains intact; stay short. The HSIF’s downward momentum continued as expected, as the index ended lower yesterday. It settled at 26,200 pts, after hovering between a high of 26,460 pts and low of 25,880 pts. From a technical perspective, the HSIF has recorded a lower close vis-à-vis the previous sessions since 29 Jan. This indicates that the downside swing, which started from 20 Jan’s “Bearish Engulfing” pattern, may continue. Overall, we keep our bearish view on the HSIF’s outlook.

As seen in the chart, we anticipate the immediate resistance level at the 26,500-pt round figure. If a breakout arises, look to 26,760 pts – determined from the high of 31 Jan – as the next resistance. Towards the downside, we are eyeing the near-term support level at 25,880 pts, which was the low of 3 Feb. This is followed by 25,507 pts, obtained from the previous low of 10 Oct 2019.

Hence, we advise traders to maintain short positions, following our recommendation of initiating short below the 28,300-pt level on 22 Jan. For now, a trailing-stop set above the 26,500-pt threshold is preferably in order to secure a larger part of the profits.

Source: RHB Securities Research - 4 Feb 2020