Maintain short positions. The HSIF saw a session of two halves yesterday. The day session initially experienced strong selling pressure, touching the 26,915-pt intraday low, before rebounding to settle at 27,226 pts. Then, during the evening session, a strong bullish momentum lifted it 187 pts higher to close at 27,413 pts. Taking cue from the evening session, we will likely see the bullish momentum following through in the coming sessions. The bulls may attempt to retest the immediate resistance at 27,750 pts or a higher hurdle of 28,080 pts, which is near the 20-day SMA line. However, as the 50-day SMA line is pointing downwards, suggesting the medium-term trend is bearish, it is very likely that the current technical rebound will be halted by the 20-day SMA line. Premised on this, we stick to our negative trading bias.

We recommend traders shift to the short positions initiated at 27,469 pts, or the closing level of 19 Jul. For risk management purposes, the initial stop-loss threshold is set at 28,080 pts.

The immediate support remains at 27,000 pts, followed by the 26,600-pt whole number. On the upside, the immediate resistance level is pegged at the 27,750-pt round figure and followed by 28,080 pts, ie 19 Jul’s high.

Source: RHB Securities Research - 22 Jul 2021