Trailing stop triggered; Initiate short positions. The HSIF saw a steep correction yesterday. The selldown left behind a long-bodied black candlestick, dismantling the bullish structure. It began the day session on a weaker note, gapping 171 pts lower to open at 26,785 pts. The bulls tried to pull the index up, touching the day high of 26,953 pts. However, the bears were too strong, and the index slipped to the 26,301-pt day low, and settled at 26,427 pts. Selling pressure continued into the night session, and the index fell further to a low of 26,284, before closing at 26,336 pts. Looking at the bigger picture, the 20-day SMA line is heading north, and the immediate term momentum has turned negative, as the RSI fell below the trend line. With the support level breached, we switch to a negative trading bias.

Our long positions, initiated at 26,177 pts or 13 Nov’s close, were closed out yesterday at 26,353 pts after the trailing stop was triggered. Concurrently, we initiate short positions at the closing level. For risk-management purposes, a stop loss can be placed above 26,825 pts. Immediate support is marked at 20 Nov’s low of 26,226 pts, followed by 25,920 pts.

On the upside, immediate resistance is marked at 23 Nov’s high of 26,709 pts, followed by 27,000 pts.

Source: RHB Securities Research - 1 Dec 2020