Stay short while setting a stop-loss above the 25,582-pt level. The HSIF formed a white candle yesterday. It rose to a high of 25,564 pts during the intraday session, before ending at 25,449 pts for the day. Still, on a technical basis, yesterday’s white candle can be viewed as the result of bargain-hunting activities post the recent losses. We think the bears may continue to control the market. This is as long as the HSIF does not recoup more than 50% of the losses created by 9 Mar’s long black candle. As the index is still trading below the declining 10-day SMA line, this suggests that the market downside swing – which began from 20 Jan’s black candle – may persist.

Presently, the immediate resistance level is anticipated at 25,582 pts, situated near the midpoint of 9 Mar’s long black candle. The next resistance is seen at the 26,000-pt psychological spot. Towards the downside, the immediate support level is set at 24,814 pts, ie the low of 9 Mar. If this level is taken out, look to 24,360 pts – which was the previous low of 10 Mar – as the next support.

Thus, we advise traders to stay short, following our recommendation of initiating short below the 25,000-pt level on 10 Mar. A stop-loss can be set above the 25,582-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 11 Mar 2020