Maintain short positions. Although the HSIF fell marginally during the day session, it managed to recoup its losses to close higher during the evening session – crossing the 20-day SMA line. The index started Monday’s day session at 28,304 pts. It fell to the day’s low of 28,073 pts before settling at 28,317 pts, which was 19 pts weaker than Friday’s day session. However, bullish momentum picked up during the evening session, with the index rising to close at 28,415 pts – a level above the 20-day SMA line. As mentioned in our previous note, the index may see selling pressure near both the 20-day and 50-day SMA lines to push it off the moving average. It needs to cross above both moving averages to see a change of trend. As this has not happened yet, we think the index is still bound by the “lower highs” downward movement. As such, we keep 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 is unchanged at the 28,000-pt psychological level, followed by March’s low of 27,503 pts. On the upside, the immediate resistance is eyed at 28,650 pts and followed by 28,850 pts.

Source: RHB Securities Research - 25 May 2021