Maintain short positions. The HSIF attempted an upside rebound yesterday. However, the effort was futile and the index closed below the 20-day SMA line. It rose 247 pts during the day session, to settle at 26,543 pts. The index started the day session flat at 26,457 pts. Buying interest emerged, pushing the index higher towards the day high of 26,698 pts, before settling at 26,543 pts. However, the evening session saw the index jittery again, falling from 26,543 pts to the session low of 26,230 pts, before closing at 26,240 pts. With the RSI momentum indicator trending lower, and the weak momentum, we think the index will hardly be able to punch through the overhead resistance in the immediate term. Coupled with two Bearish Marubozo pattern seen lately, a likely scenario will be a correction to retest the low of 26,000 pts. Without any positive reversal signals, we maintain our negative trading bias.

We recommend traders to stick to short positions. We initiated these at 26,427 pts, or the closing level of 7 Dec. For risk-management purposes, a stop-loss can be placed above 26,932 pts.

The immediate support is unchanged at the recent 26,257-pt low, followed by 25,920 pts. On the upside, the immediate resistance is marked at the recent high of 26,932 pts, followed by the next hurdle at 27,000 pts.

Source: RHB Securities Research - 10 Dec 2020