The HSIF charted a fresh “lower low” last Friday after it retraced 429 pts to settle at 20,285 pts – the lowest close since 30 May. The index opened at 20,682 pts that day, then climbed towards the day’s high of 20,726 pts before falling to the day’s low of 20,207 pts before the close. In the evening, it bounced off the session’s low of 20,074 pts, and last traded at 20,330 pts.
Despite a strong display during the evening sessions, the downtrend remained on track with “lower highs” and “lower lows”. If it undergoes a rebound and climbs above the 20,543-pt resistance, this may indicate a false bearish breakout (which happened on 15 Jul) and signal a bullish reversal. Otherwise, a continuation of the correction may trigger a retracement towards 20,000 pts, followed by 19,700 pts. At this stage, RHB has yet to see a fresh “higher high” pattern – so it thinks that the bears are still firmly in control. As such, the house holds its negative bias. It recommends that traders maintain the short positions initiated at 20,836 pts or the closing level of 12 Jul. To manage the trading risks, the stop-loss has been revised to 21,000 pts, from 22,000 pts. The immediate support is now at 20,000 pts, followed by 19,700 pts.
On the flip side, the nearest resistance has been changed to 20,543 pts – 14 Jul’s low – followed by 21,000 pts.
