Triggers trailing stop; initiate short positions. The HSIF fell 631 pts to settle at 29,445 pts. Following a bullish session on Monday, the index gapped 28 pts higher to open at 29,930 pts. After testing the day high of 29,956 pts, it slipped towards the 29,348-pt day low and last traded at 29,445 pts. During the evening session, the HSIF pared some of the earlier losses, closing 29,644 pts higher after rebounding to a session high of 29,663 pts. The latest session saw the bears having greater strength than the bulls, forming a Bearish Engulfing reversal pattern. The sentiment is in favour of the bears, as the index faces strong resistance at 30,000 pts. Coupled with the RSI trending lower, we think the HSIF has started a downwards correction phase. Hence, we shift over to a negative trading bias.

Our previous long positions initiated at 26,943 pts – the closing level of 30 Dec 2020 – were closed out during the latest session after triggering a trailing stop at 29,450 pts. Conversely, we initiate short positions at the closing level of 26 Jan. To manage risks, a stop loss is placed above 30,143 pts.

The immediate support is marked at 29,323 pts and followed by the round figure of 29,000 pts. Towards the upside, the immediate resistance is sighted at 30,000 pts and followed by the next hurdle: 21 Jan’s high of 30,143 pts.

Source: RHB Securities Research - 27 Jan 2021