Downside move is likely to continue; stay short. The HSIF formed a black candle yesterday. It settled at 26,580 pts, after oscillating between a high of 26,747 pts and low of 26,296 pts. Based on the current outlook, we think the sellers may have retained control of the market. This was as yesterday’s black candle has erased most of the previous session’s gains. Given that the HSIF is still trading below the declining 10-day SMA line, this implies that the bearish sentiment stays intact.

As shown in the chart, the immediate resistance level is seen at the 27,000-pt psychological mark, set near the midpoint of 24 Feb’s long black candle. The next resistance is maintained at 27,335 pts, which was the high of 24 Feb. On the other hand, the near-term support level is anticipated at 26,310 pts, ie 25 Feb’s low. This is followed by 25,880 pts, defined from the previous low of 3 Feb.

Therefore, we advise traders to stay short, given that we initially recommended initiating short below the 27,000-pt level on 25 Feb. A trailing-stop set above the 27,000-pt mark is preferable in order to limit the risk per trade.

Source: RHB Securities Research - 27 Feb 2020