Maintain short positions. The HSIF rebounded near the 20-day SMA line with a bullish pattern – a hammer – sighted. The index began the day session in risk-off mode, gapping 157 pts lower to open at 26,515 pts. It was dragged down to the day low of 26,334 pts, before the buying interest came in, pushing the index up to the 26,619-pt day high, and finally settling at 26,537 pts. The evening session saw the index inch higher to close at 26,597 pts, after testing the session high of 26,643 pts. Although the latest session saw a hammer pattern, we think the Bearish Marubozu is still gripping the index. In the immediate-term, we expect the index to move sideways or build an interim base near the 20-day SMA line. Until the resistance level is breached, we maintain our negative trading bias.

We recommend traders maintain short positions. We initiated these at 26,589 pts on 1 Dec. For risk-management purposes, a stop loss can be placed above 26,825 pts.

Immediate support is marked at the low of 20 Nov, which was 26,226 pts, followed by 25,920 pts. On the upside, the immediate resistance is pegged at the high of 23 Nov, or 26,709 pts, followed by 27,000 pts.

Source: RHB Securities Research - 3 Dec 2020