Maintain short positions. The HSIF’s October futures contracts continue to see sideways movements just before the eve of the Chinese national holiday, inching 9 pts higher to settle the day session at 24,524 pts. After it opened weaker at 24,380 pts on Thursday morning, the index found its intraday low at 24,278 pts and rebounded towards 24,622 pts before closing at 24,524 pts. Despite moving sideways, the HSIF has been rising higher for the past four sessions since last Monday. However, both the 20- and 50-day SMA lines are trending lower, indicating the mediumterm trend is still heading lower. Coupled with the 24,800-pt resistace level remaining intact, the index has yet to form a meaningful “higher high” bullish pattern. Post consolidations, we think the HSIF will resume its downward corrections. As such, we continue to hold to our bearish trading bias until the stop loss is breached.

Traders should retain the short positions initiated at 25,646 pts, or the close of 9 Sep’s day session. To limit the trading risks, the trailing-stop threshold is placed at 24,800 pts.

The nearest support is marked at 24,000 pts and followed by 23,666 pts, or 21 Sep’s low. Meanwhile, the nearest resistance is revised to the 24,800-pt round figure. The higher resistance is pegged at the 25,000-pt psychological level.

Source: RHB Securities Research - 4 Oct 2021