Maintain short positions. The HSIF saw the bearish momentum extend yesterday, plunging 1,092 pts to settle the day session at 25,038 pts. It has lost 2,234 pts in two consecutive sessions – on track to record the worst week in 2021 by Friday. Yesterday, after the index opened at 26,100 pts and tested the 26,340-pt day high, the selling pressure intensified in the late morning, dragging it to reach the 24,743-pt day low. The bears took profit near the day low, where the HSIF rebounded to close at 25,038 pts. Further profit taking during the evening session lifted the index higher – it last traded at 25,244 pts. Since the volatility has increased lately, coupled with the HSIF trading at a level far from the 20-day SMA line, we expect a technical rebound to happen in immediate term – where 25,600 pts will act as the immediate resistance. Before the “mean-reversion” rebound happens, we retain our negative trading bias.

We recommend traders stick with the short positions initiated at 27,469 pts, or the closing level of 19 Jul. To manage trading risks, the trailing-stop mark is adjusted to 25,800 pts.

The immediate support is expected at the 24,743-pt the low of 27 Jul, followed by the 24,600-pt whole number. Meanwhile, the immediate resistance level is changed to the 25,600-pt whole number, followed by the 26,000-pt psychological level

Source: RHB Securities Research - 28 Jul 2021