Stay short, with a trailing-stop set above the 26,500-pt level. The HSIF ended higher to form a white candle yesterday. It dropped to a low of 25,582 pts during the intraday session before ending at 26,299 pts for the day. Unsurprisingly, yesterday’s white candle should be viewed as a technical rebound following the recent losses. From a technical viewpoint, we think the bears may continue to control the market – as long as the HSIF does not recoup 50% of the losses created by 28 Feb’s long black candle. Overall, we keep our bearish view on the index’s outlook.

As seen in the chart, we are eyeing the immediate resistance level at 26,500 pts, ie near the midpoint of 28 Feb’s long black candle. If the price climbs above this level, look to 26,834 pts – the high of 28 Feb – as the next resistance. Towards the downside, the immediate support level is seen at 25,880 pts, which was obtained from 3 Feb’s low. The next support is anticipated at 25,582 pts, or the previous low of 2 Mar.

Hence, we advise traders to maintain short positions, since we originally recommended initiating short below the 27,000-pt level on 25 Feb. A trailing-stop can set above the 26,500-pt threshold to minimise the risks per trade.

Source: RHB Securities Research - 3 Mar 2020