Maintain short positons. The HSIF retraced lower yesterday to settle at 26,238 pts. On Tuesday morning, the index started the session flat at 26,390 pts. Selling pressure was seen during the early session, which saw the HSIF fall to the day low of 26,100 pts. The bulls then took the advantage to buy near this low, which pushed the index slightly higher to settle at 26,238 – this was after it tested the day high of 26,409 pts. The evening session continued to see sideways action, with the HSIF closing at 26,370 pts after bouncing between 26,254 pts and 26,380 pts. Based on yesterday’s session, we maintaining the view that the 20-day SMA line is posing a resistance to the index. Profittaking or selling pressure will emerge near the moving average. If the moving average turns lower, we do expect more selling pressure ahead. Without any positive signs yet, we keep to our negative trading bias.

We recommend traders maintain short positions. We initiated such positions at 26,427 pts, or the closing level on 7 Dec. For risk-management purposes, a stop-loss can be placed above the 26,932-pt level.

The immediate support is marked at the recent low of 26,100 pts and followed by 25,920 pts. On the upside, the immediate resistance is pegged at 7 Dec’s high of 26,932 pts and followed by the round figure hurdle at 27,000 pts.

Source: RHB Securities Research - 16 Dec 2020