Maintain short positions. Due to an unfruitful attempt to cross the 20-day SMA line, the HSIF corrected 7 pts to settle the day session lower at 28,517 pts. Despite touching the 28,753-pt intraday high, the index was rejected from the 20-day SMA line – forming a long upper shadow. However, the bulls did not give up, and the HSIF rose higher to close at 28,644 pts during the evening session. Since the index is trading below both the 20-day and 50-day SMA lines, selling pressure may persist near the moving average in the coming sessions. If both moving averages turn lower in the coming sessions, selling pressure may accelerate. As we have observed the HSIF forming a “lower high” bearish pattern, we stick to our negative trading bias.

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

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

Source: RHB Securities Research - 10 May 2021