Maintain short positions. The HSIF has extended the whipsaw movement near the 20-day SMA line. It initially started Friday’s session stronger at 28,505 pts, but then saw selling pressure near the 20-day SMA line, falling from the 28,528-pt day high towards the 28,176-pt day low – reboundeding slightly to end the day session at 28,336 pts. The HSIF retraced 53 pts during the evening session, closing at 28,283 pts. It failed to convincingly cross the 20-day SMA line, forming a long upper shadow near the moving average. We saw the 20-day SMA line pointing south and, coupled with the RSI trending below the 50% level, the HSIF may retrace lower in the sessions ahead. If it falls below the 20-day SMA, it may form another “lower high” bearish pattern. Conversely, breaches above the 20- or 50-day SMA lines will see the trend tilting towards the upwards. Before that happens, we stick to our negative trading bias.

Traders should hold on 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 placed at 28,750 pts.

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

Source: RHB Securities Research - 24 May 2021