Maintain short positions. The HSIF closed at 23,430 pts for the month of September, down 1,645 pts from August. The latest candle also engulfed two bullish candles formed during the two previous months, snapping the rally which began in June. The prevailing long-term trend heading south, coupled with a bearish September candle, suggest that the bearish momentum will continue, and the October candle is likely to close in negative territory. To invalidate this expectation, HSIF needs to close at least above the key resistance level of 24,150 pts for the formation of a bullish candle. 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, on 3 Sep. For risk-management purposes, we maintain the trailing stop-loss level at the 23,771-pt mark.

The support level is marked at 22,750 pts, ie the low of 30 Mar. This is followed by the 22,389-pt level, 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 – the low of 7 Aug.

Source: RHB Securities Research - 1 Oct 2020