Maintain short positions. The HSIF went on a rebound yesterday, after a huge sell-down. The index began the day session at 26,440 pts, a 104-pt gap-up in the morning. It briefly traded at the low of 26,382 pts, then charged higher towards the day high of 26,659 pts, and settled at 26,589 pts. At the evening session, positive momentum continued to be seen on the index, closing at 26,672 pts after touching the session high of 26,700 pts. Despite the positive price action displayed by the index, we think that the sell-down that happened on 30 Nov, or the Bearish Marubozu is still overshadowing the index. The recent rebound has not yet recovered to 50% of the long-bodied candlestick. The index may need to see more consolidation near the 20-day SMA line before re-attempting to challenge the nearest resistance. Until the resistance posed by the Bearish Marubozu is breached, we maintain our negative trading bias.

We recommend traders to switch to short positions. We initiated short positions at 26,589 pts on 1 Dec. For riskmanagement purposes, a stop loss can be placed above 26,825 pts.

The immediate support is marked at the low of 20 Nov, ie 26,226 pts, followed by 25,920 pts. On the upside, the immediate resistance is marked at the high of 23 Nov, ie 26,709 pts, followed by next the hurdle at 27,000 pts.

Source: RHB Securities Research - 2 Dec 2020