Maintain short positons. The HSIF extended the rebound to settle at 26,698 pts, 168 pts better than Wednesday’s settlement price. Yesterday morning, it opened flat at 26,501 pts, and a shaky start saw the index pulling back to the 26,398-pt day low before charging higher to the 26,709-pt day high. During the evening session, the bulls adjusted the portfolio by taking profits, dragging the HSIF lower to close at 26,623 pts. The index also managed to flip above the 20-day SMA line, as the RSI momentum is testing the downtrend line boundary too. If it does climb further, it may challenge the upside resistance posed by the Bearish Marubozu. Although yesterday’s price action was positive, we still see it capped by the pattern of lower lows and highs that began on 30 Nov – though the possibility of not having follow-through actions is doubtful. Until an upside resistance breach, we keep to our negative trading bias.

We recommend traders stick to 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 threshold.

The immediate support remains unchanged at the recent 26,100-pt low 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 27,000-pt round figure hurdle.

Source: RHB Securities Research - 18 Dec 2020