Trailing-stop triggered; initiate short positions. The HSIF experienced strong selling pressure yesterday, tumbling 567 pts to settle the day session at 25,646 pts – below the 25,700-pt trailing-stop threshold. The index started at 25,924 pts and moved lower throughout the day session, touching 25,581 pts before the close. Despite the risk-off mood during the day session, the evening session saw a strong 148-pt rebound to close at 25,794 pts. Due to the weak price action during the day, the index has formed a fresh “lower low” bearish pattern, falling below the 20-day SMA line. If selling pressure extends, it may correct lower towards 25,295 pts. We shift to a negative trading bias, as the trailing-stop was breached.

We closed out the long positions, initiated at 25,638 pts or the closing level of 24 Aug’s day session, after the trailingstop was triggered at 25,700 pts. Conversely, we initiate short positions at the close of 9 Sep’s day session, ie. 25,646 pts. To mitigate trading risks, the initial stop-loss is placed at 26,400 pts.

The immediate support is revised to 25,295 pts, which was 27 Aug’s low, followed by 25,005 pts or the low of 30 Aug. The immediate resistance is pegged at 26,311 pts – 9 Sep’s high – followed by 26,735 pts, or 12 Aug’s high.

Source: RHB Securities Research - 10 Sept 2021