Stay short, provided the 25,582-pt resistance is not violated at the close. The HSIF’s downward momentum has continued as expected, as a black candle was formed yesterday. This points towards a continuation of the downside move. It settled at 25,129 pts, off its high of 25,743 pts. The market outlook remains bearish, as the index has marked a lower close below the declining 10-day SMA line. As the 14-day RSI indicator has deteriorated to a weaker reading at 34.29 pts, this indicates that the market correction, which began in mid-January, may carry on.

As seen in the chart, the immediate resistance level is maintained at 25,582 pts – set near the midpoint of 9 Mar’s long black candle. Meanwhile, the next resistance is anticipated at the 26,000-pt round figure. Conversely, we are eyeing the near-term support levels at 24,814 pts and 24,360 pts, ie the previous lows of 9 Mar and 10 Mar.

Therefore, we advise traders to maintain short positions, in line with our initial recommendation to have short positions below the 25,000-pt level on 10 Mar. A stop-loss can be set above the 25,582-pt mark to limit the risk per trade.

Source: RHB Securities Research - 12 Mar 2020