The HSIF bounced off the 20,500-point support yesterday as it attempted to climb back above the 20-day SMA line.
It initially started off Tuesday’s session at 20,907 points. After falling to the 20,473-point day low, it rebounded to touch the 21,056-point day high before closing at 20,905 points.
During the evening session, it pulled back marginally and last traded at 20,901 points. The long lower shadow indicates that the 20,500-point level is acting as strong downside support. If the bullish momentum continues, it may test the immediate resistance at 21,200 points.
Breaching this threshold should reactivate the Bullish Crossover signal and lift the index higher. However, in the event the 20,500-point support gives way, we expect a strong correction follow-through.
Since the Bearish Marubozu that formed on 13 Jun remains intact, RHB Research thinks the bears remain in control. As such, it maintains its negative bias.
RHB recommends traders maintain the short positions initiated at 20,598 points or the closing of 13 Jun’s evening session. To manage the trading risks, the stop-loss threshold is set at 22,000 points.
The immediate support stays at 20,500 points and is followed by the 20,000-point round figure. On the upside, the nearest resistance is eyed at 21,200 pts with the higher hurdle at the 22,000-point whole number.
