Maintain short positions. Yesterday, the HSIF ended lower to form a black candle, declining by 334 pts to close at 24,153 pts, off the session’s high of 24,468 pts and low of 24,001 pts. On a technical basis, the downside move is likely to resume, after the index has erased most of the previous session’s losses. This may also further extend the downside swing that started with 29 Apr’s “Shooting Star” pattern. Overall, we keep our bearish view on the HSIF’s outlook.

According to the daily chart, we anticipate the immediate resistance level at 24,777 pts, ie the high of 29 Apr’s “Shooting Star pattern. The next resistance would likely be at the 25,000-pt psychological spot. On the other hand, we are eyeing the immediate support level at 23,770 pts, obtained near the lows of 7-8 May. Meanwhile, the next support is maintained at 23,240 pts, ie the previous low of 5 May.

Therefore, we advise traders to stay short, given that we previously recommended initiating short below the 24,132- pt level on 8 May. A stop-loss set above the 24,777-pt mark is advisable in order to minimise the risk per trade.

Source: RHB Securities Research - 13 May 2020