Maintain short positions. The HSIF attempted to cross above the 50-day SMA line yesterday, rising 185 pts to settle at 25,195 pts. The index started Thursday’s session at 25,113 pts and initially dipped lower due to profit-taking activities, reaching its intraday low at 24,963 pts. Brief buying momentum emerged in the afternoon to push the HSIF higher, and it tested the 25,231-pt intraday high before the close. However, the index failed to break past the 50-day SMA line, and the momentum faltered in the evening session – it retreated 284 pts and last traded at 24,911 pts. As the RSI is falling in tandem with the HSIF, expect negative momentum to be in play for the coming sessions. The index will likely retrace and retest its 24,818-pt immediate support. Breaching this will open doors for more downside corrections. Since the Bullish Crossover of moving averages failed to lift the HSIF higher, the downtrending 50-day SMA line will now act as strong resistance. As such, we hold on to our negative trading bias.

Traders should retain the short positions initiated at 25,162 pts, or the closing of 29 Oct’s evening session. For trading-risk management, the stop-loss threshold is placed at 25,513 pts.

The nearest support remains at 24,818 pts – 12 Oct’s low – and followed by 24,558 pts, or 8 Oct’s low. The immediate resistance is changed to 25,231 pts – 4 Nov’s high – followed by 29 Oct’s high, ie 25,513 pts.

Source: RHB Securities Research - 5 Nov 2021