Maintain short positions. The HSIF had a strong start with a gap up at 23,435 pts, moving higher to test the day high at 23,608 pts, before eventually losing steam to close at 23,397 pts – a decline of 38 pts. Looking at the latest candle, the index formed a hanging man or inverted hammer, indicating that the bulls were hesistating – probably due to profit-taking before the market holiday on Wednesday and Thursday. With the overall trend still pointing downwards, we are keeping to our negative trading bias until the resistance level is breached.

We advise traders to stay in short positions. We initiated these at 24,924 pts, which was the closing level of 3 Sep. For risk-management purposes, we maintain the trailing stop-loss level at the 23,771-pt mark, which was the day high of 24 Sep.

The support level is marked at 22,750 pts, ie the low of 30 Mar. This is followed by the 22,389-pt mark, which was the day low of 29 May. Moving up, the immediate resistance is set at 23,771 pts and followed by the 24,150-pt mark, or the low of 7 Aug.

Source: RHB Securities Research - 30 Sept 2020