Maintain short positions. The HSIF failed to sustain its recent rebound. At the latest session, it settled 425 pts lower at 24,391 pts – after hitting a low of 23,150 pts. The closing level again placed the index below the 50-day SMA line. Broadly, the index’s retracement phase that started from 7 Jul’s “Bearish Harami” formation is still firmly in place. Towards the upside, this negative bias would stay as long as the index is still capped by the 24,800-pt resistance. Maintain our negative trading bias.

We recommend traders stay in short positions. We initiated these at 24,920 pts, ie the closing level of 16 Jul. For risk-management purposes, a stop-loss can now be placed at the breakeven mark.

The immediate support is revised to 24,185 pts, or the low of 3 Aug. This is followed by the 24,000-pt round figure. Moving up, the immediate resistance is pegged at 24,800 pts, followed by 25,150 pts – a level near 30 Jul’s high.

Source: RHB Securities Research - 10 Aug 2020