Stop loss triggered; initiate short positions. The HSIF saw heavy selling pressure yesterday, falling 444 pts to settle at 30,077 pts. The index had a strong opening, gapping 118 pts higher to open at 30,820 pts. While it rose to the day high of 30,992 pts, the bears dragged it towards the 30,052-pt day low – breaching the previous 30,220-pt support level. During the evening session, the HSIF recouped earlier losses to close at 30,240 pts. The difference between the day high and low: 940 pts, ie the widest day range we have seen in the last 10 sessions. Meanwhile, the 10-day average trading range increased to 312 pts. As it becomes volatile due to a higher day range, by projecting 2x average true range from 30,077 pts, we see the latest resistance level at 30,700 pts. Underpinning a risk-off sentiment, we think the HSIF is due some minor corrections. Hence, we shift over to a negative trading bias.

We closed out the long positions initiated at 29,230 pts – the closing level of 2 Feb – after triggering the stop-loss mark at 30,200 pts. Conversely, we initiate short positions at the closing level of 22 Feb. For risk management, a stop loss is placed at 30,700 pts.

The immediate support is marked at 29,900 pts and followed by 29,452 pts. Towards the upside, the immediate resistance is pegged at 30,700 pts and followed by 30,992 pts.

Source: RHB Securities Research - 23 Feb 2021