Maintain short positions. The HSIF failed to stage a meaningful rebound above the 20-day SMA line yesterday, declining 54 pts to settle the day session at 28,463 pts. While it managed to climb towards the intraday high of 28,747 pts, buying momentum didn’t follow through. The bears dragged it down to the day low of 28,335 pts before closing at 28,463 pts. Selling pressure continued in the evening session, with the index falling to the session’s low of 28,264 pts, and was last traded at 28,280 pts. If selling pressure continues in the coming sessions, the index may retest the 28,000-pt psychological support level. A breach of this level will see a deeper correction towards March’s 27,503-pt low. As the 50-day SMA line is seen turning south, reaffirming the downward movement, we keep our negative trading bias.

We recommend traders stick to 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 placed at 28,900 pts.

The immediate support is marked at the 28,000-pt psychological level, followed by March’s low of 27,503 pts. On the other hand, the immediate resistance is seen at 28,650 pts, followed by 28,850 pts.

Source: RHB Securities Research - 11 May 2021