Maintain short positions. The HSIF extended its rebound on Monday, rising 181 pts to settle the day session at 28,090 pts. After the index opened at 28,060 pts, it whipsawed between the day low of 27,913 pts and 28,136-pt day high before settling at 28,090 pts. It edged higher during the evening session to close at 28,133 pts after a mild pullback to the 27,966-pt session low. As mentioned in our previous note, the HSIF has to at least cross above 28,650 pts to form a fresh “higher high” pattern. Meanwhile, we are expecting selling pressure to emerge near both the 20- and 50-day SMA lines. Breaching above the moving averages may give a glimpse of hope that the trend is tilting upwards. Since the stop loss remains intact, we hold on 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 purposes, the stop-loss level is placed at 28,750 pts.

The immediate support is revised to 28,000-pt pyschological level and followed by March’s low of 27,503 pts. Conversely, the immediate resistance is pegged to 28,223 pts, followed by 28,650 pts.

Source: RHB Securities Research - 18 May 2021