Maintain long positions. Despite moving lower for a fifth consecutive session, the HSIF managed to stay above the 20-day SMA line – losing another 65 pts yesterday to settle the day session at 28,683 pts. It had a brief bullish momentum during this early session, where it rose to a day high of 28,924 pts after opening at 28,755 pts. It then retraced to the 28,559-pt day low just before noon and closed at 28,683 pts. The evening session continued to witness selling pressure, where the index – at one point – dipped to 28,615-pt session low before closing at 28,710 pts. We observed the RSI falling below the 50% threshold, giving a cautionery sign that the odds of a technical rebound are fading. If the HSIF breaches below the 20-day SMA line, it may extend the “lower low” bearish pattern, and we may see selling pressure accelerate. We maintain our positive trading bias until the stop loss is breached.

Traders should stick to the long positions initiated at 28,894 pts, or the closing level of 25 May’s day session. For risk management purposes, the stop-loss threshold is placed at 28,550 pts.

The immediate support is changed to 28,550 pts and followed by 28,300 pts. On the upside, the immediate resistance remains unchanged at the psychological 29,000-pt level, followed by 29,400 pts – the high of 1 Jun.

Source: RHB Securities Research - 9 Jun 2021