Maintain short positions. The HSIF saw whipsaw movement near the 20-day SMA line. It started Thursday’s session weaker at 28,286 pts, and found the session’s low at 28,156 pts before reversing to the high of 28,396 pts. Selling pressure emerged in the afternoon, where the index closed at 28,282 pts – 172 pts lower than the previous session. Despite the weak performance during the day, the evening session saw a change of momentum. The bulls lifted the index to close at 28,409 pts after forming the session’s low at 28,175 pts. If it crosses the 20-day SMA line, it may then challenge the overhead resistance of the 50-day SMA line. Crossing both moving averages may be an indication that the trend is changing upwards. Until then, the index may face selling pressure near the moving averages, and downside risk remains. Hence, we maintain our negative trading bias.

Traders should stick to the short positions initiated at the closing level of 3 May’s day session, or 28,133 pts. For risk management purposes, the stop-loss threshold is set at 28,750 pts.

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

Source: RHB Securities Research - 21 May 2021