Maintain short positons. The HSIF saw an uninspired session, descending lower to settle at 26,130 pts. The index opened at 26,242 pts during the day session, rebounding to test the day high at 26,380 pts. However, the rebound lacked momentum, and it retraced to the low of 25,991 pts before settling at 26,130 pts. The evening session saw further corrections – the HSIF last traded at 26,118 pts, a level lower than the day session’s settlement price. The index is moving lower and away from the 20-day SMA line. We think it likely that it will test the downside support near the 50-day SMA line. If the HSIF breaches the moving average, expect it to test the lower support at 25,576 pts. Since the index is trending lower, we maintain 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 level.

The immediate support is marked at 25,920 pts and followed by 9 Nov’s low, ie 25,576 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 - 23 Dec 2020