Maintain short positions. The HSIF tracked the Bearish Crossover of the 20- and 50-day SMA lines, declining 435 pts to settle at 28,934 pts. It started the session at 29,125 pts. After touching the day’s high of 29,241 pts, the bears dragged the index towards the low of 28,704 pts. The session closed at 28,934 pts. During the evening session, it recouped its losses to close at 29,041 – marginally above the 29,000-pt level. With the Bearish Crossover of the moving averages, the downtrend has begun, and the index will tend to move downwards. A breach of the 28,283-pt level will see a deeper retracement. Meanwhile, if the index manages to cross above the resistance level of 29,405 pts, there is a possibility a new “higher high” pattern forming, and consequently negating the Bearish Crossover. Until this happens, we will stick to our negative trading bias.

We recommend traders stick to the short positions initiated at 30,077 pts, or the closing level of 22 Feb. For risk management purposes, the trailing-stop remains at 29,405 pts.

The support level is marked at 15 Mar’s low of 28,563 pts, followed by 9 March’s low of 28,283 pts. Towards the upside, the immediate resistance is pegged at 11 Mar’s high of 29,405 pts, followed by 29,650 pts.

Source: RHB Securities Research - 22 Mar 2021