“Long” positions being maintained by RHB Research on HSI futures.
The HSIF experienced strong selling pressure on Monday, retreating 571 points to close at 21,155 points, thereby retaining its position above the 50-day SMA line. Yesterday, it started off at 21,710 points. After touching the session’s high of 21,862 points, selling pressure dragged the index lower throughout the session, hitting the day’s low of 21,000 points before the close. In the evening session, it fell another 131 points and last traded at 21,024 points. Observe that since 4 July, the index has failed to climb above the 22,000-point resistance, trending lower amid the “lower highs” and “lower lows”. The momentum is getting weaker in tandem with the RSI, which is also pulling lower. At this stage, the research house is holding the view that the bulls will attempt to defend the 50-day SMA line. Breaching below the medium term moving average line indicates the bears will take control. If the index manages to climb back above the 20-day SMA line, it should resume its upside movement. For now, the research house is holding on to their bullish bias until the stop-loss is triggered.
Traders should retain the long positions initiated at 21,474 points, or the close of 21 June. To manage the downside risks, the stop-loss is set at 21,000 points. The immediate support has been changed to 21,000 points, followed by 20,473 points, or the low of 14 June. On the other hand, the nearest resistance is pegged at 22,000 points, followed by 22,413 points, which was the high of 28 June.
