Maintain short positons. The HSIF has seen its momentum stalling near the 20-day SMA line. However, as the bulls are struggling to stage a meaningful rebound, the index settled at 26,296 pts, ie 131 pts lower than the previous mark. Yesterday, the HSIF jumped higher to start the session at 26,580 pts, but – despite the positive opening – it fell to the day low of 26,278 pts. During the evening session, the bulls stepped in to recoup losses and the index closed higher at 26,407 pts. Although there was a rebound during overnight action, the HSIF is trading below the 20-day SMA line. We believe the moving average will act as overhead resistance, exerting selling pressure on the index in coming sessions. With the RSI momentum indicator trending lower, the momentum has slowed down. Since there are a lot of hurdles on the upside, we maintain our negative trading bias.

We recommend traders to swtich over to short positions. We have initiated such positions at 26,427 pts, or 7 Dec’s closing level. For risk-management purposes, a stop-loss can be placed above 26,932 pts.

The immediate support remains at the recent 26,257-pt low and is followed by 25,920 pts. Conversely, the immediate resistance is sighted at the recent high of 26,932 pts and followed by the next hurdle: 27,000 pts.

Source: RHB Securities Research - 9 Dec 2020