Maintain short positons. The HSIF saw momentum picking up yesterday as sentiment turned bullish, which saw the index rising 232 pts from the previous evening session to settle at 26,595 pts. It had a strong opening, gapping 88 pts higher to start at 26,498 pts. After briefly trading at the 26,437-pt day low, the HSIF turned higher and touched the day high at 26,623 pts. The evening session continued to see the bulls marking higher to test the session high of 26,666 pts before closing at 26,583 pts. We think the strong rebound could be due to the short coverings by the bears before the month-end close. We noticed the RSI attempting to cross the downtrend line, indicating that the underlying momentum is turning bullish. However, we want to see a higher high formation or resistance breakout to confirm the trend change. Until this happens, we stick 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 level can be placed above 26,810 pts.

The immediate support is marked at 28 Dec’s low – 26,197 pts – and followed by 25,920 pts. On the upside, the immediate resistance is pegged at 7 Dec’s 26,729-pt high and followed by the next hurdle at 26,932 pts.

Source: RHB Securities Research - 30 Dec 2020