Maintain short positions. After breaching the previous support level of 29,450 pts on Tuesday, the HSIF’s Jan 2021 futures contract saw prices continue to correct futher, to settle at 28,748 pts. The HSIF then moved over to the Feb 2021 contract. During the evening session, the HSIF Feb 2021 contract saw prices rebound to close at 28,976 pts after touching the session’s low of 28,334 pts. Currently, the index is sitting on the 20-day SMA line. If the 20-day SMA line gives way, the index may drift lower towards the 50-day SMA line. On the other hand, bullish sentiment may emerge again if the index can pierce through the overhead resistance, sighted at 29,663 pts. Until the stop-loss level is breached, we will maintain our negative trading bias.

We recommend traders shift over to short positions. We initiated these at 29,445 pts, or the closing level of 26 Jan. To manage risks, a stop-loss is placed above 29,663 pts.

The immediate support is marked at 15 Jan’s low of 28,313 pts, followed by the 28,000-pt round figure. Towards the upside, the immediate resistance is pegged at 28 Jan’s high of 29,311 pts, followed by the next hurdle at 29,663 pts.

Source: RHB Securities Research - 29 Jan 2021