Maintain short positions. The HSIF formed an interim low near the 28,000-pt support level, rebounding 223 pts to settle the day session at 28,524 pts. Despite gapping down to start Thursday’s session at 28,400 pts, the index found its intraday low at 28,217 pts. It subsequently recovered some losses to close at 28,524 pts. In the evening session, it dipped again and was last traded at 28,412 pts. If selling pressure subsides, the index may extend its rebound to test the overhead resistance of the 20-day SMA line. However, as the RSI is trading below the 50% threshold, it may face a stiff challenge to cross above the 20-day or 50-day SMA line. Both moving averages are pointing downwards, indicating that the downward movement that started with the Bearish Crossover may extend. Unless the index can move beyond the 50-day SMA line, and change the SMA line’s direction, we keep our negative trading bias.

We recommend traders stick with the short positions initiated at the closing level of 3 May’s day session, or 28,133 pts. For risk management, the initial stop-loss is set at 28,900 pts.

The immediate support remains at the 28,000-pt psychological level, followed by March’s lowest low of 27,503 pts. Meanwhile, the immediate resistance is pegged at 28,650 pts, followed by 28,850 pts.

Source: RHB Securities Research - 7 May 2021