Maintain short positions. The HSIF continued to experience selling pressure on Monday, falling 177 pts to settle the November futures contracts at 23,905 pts – during the last trading session, these contracts opened at 23,941 pts. The index initially rose during the early session to test the 24,155-pt day high. However, it pulled back in the afternoon to reach the 23,869-pt day low before the close. During the evening session, the December futures contracts continued to move lower and last traded at 23,705 pts. Despite the HSIF correcting lower, it managed to stay above the 23,666-pt immediate support. It will likely consolidate sideways for the immediate session. In the event the immediate threshold is breached, we expect the selling pressure to accelerate towards next potential support at 23,000 pts. We observed the 20-day SMA line crossing below the 50-day SMA line. With the Bearish Crossover, this confirms that the index is now in a correction phase. As such, we stick to our negative trading bias.

We recommend traders keep to the short positions initiated at 24,892 pts, ie the closing level of 19 Nov’s evening session. To limit the trading risks, the stop-loss point is set at 25,000 pts.

The immediate support remains at 23,666 pts – 21 Sep’s low – and is followed by the subsequent support at 23,000 pts. The immediate resistance is fixed at the 24,200-pt whole number and followed by 24,743 pts or 26 Nov’s high.

Source: RHB Securities Research - 30 Nov 2021