Initiate short positions below the 27,291-pt level. The HSIF ended lower yesterday to form a black candle. It dropped to a low of 26,905 pts during the intraday session, before ending at 27,094 pts for the day. The index closed below the 27,120-pt support mentioned previously and posted a second consecutive black candle, implying that the sentiment has turned negative. This can be viewed as a continuation of the sellers extending the downward momentum from 29 Jan’s downside gap. Yesterday’s closing also triggered our previous trailing-stop recommendation at the 27,120-pt threshold, which has locked in part of the profits.

Currently, we are eyeing the immediate resistance level at the 27,291 pts, defined from 10 Feb’s high. The crucial resistance is anticipated at 27,556 pts, ie the downside gap resistance of 29 Jan. On the other hand, the immediate support level is seen at 26,747 pts, which was obtained from the low of 6 Feb. Meanwhile, the next support is situated at 26,205 pts, or the low of 4 Feb.

Hence, we advise traders to initiate short positions below the 27,291-pt level. A stop-loss can be set above the 27,556-pt threshold to minimise the risk per trade.

Source: RHB Securities Research - 11 Feb 2020