Maintain short positions. Following the Hammer pattern formed on Wednesday, the HSIF saw a strong rebound yesterday, rising 344 pts to settle the day’s session of 24,519 pts. It initially opened at 24,453 pts and surged higher to 24,792 pts – the day’s high – before retracing lower to close at 24,519 pts. During the evening session, it fell 65 pts further, last trading at 24,454 pts. The latest session of the bullish candlestick with a long upper shadow, shows that the recent rebound is capped by the selling momentum below 25,000 pts ie forming a “lower high” bearish structure below the 20-day average line. The bearish momentum is still in control unless the index manages to surpass the 25,000-pt threshold. With the weak RSI strength below the 40% level, the bearish momentum is expected to dominate in the coming sessions. Hence, we hold on to our bearish trading bias.

Traders should stick to their short positions initiated at 25,646 pts – the close of 9 Sep’s day session. For risk management, the stop-loss is pegged at 24,800 pts. The nearest support is set at 23,500 pts, followed by 23,000 pts.

The immediate resistance is still eyed at 24,554 pts, or the low of 20 Aug, before reaching the 25,000-pt psychological level.

Source: RHB Securities Research - 24 Sept 2021