Despite of the strong rebound staged yesterday, RHB Research is maintaining “short” positions on HSI futures for now.
The HSIF staged a strong rebound on Monday as market sentiment improved. It started off Monday’s session at 20,301 pts. It initially dipped to the session’s 20,074-point low, but managed to pare the losses and climb to the day’s high of 20,896 pts before the close. As mentioned in our previous note, the latest price action saw the index climb above the 20,543-pt resistance, suggesting that a false breakout has taken place (15 Jul). Therefore, the 20,543-pt level has become the latest support. As long as the index remains above the immediate support, it may climb to test the 21,000-pt resistance. A breach of the immediate threshold would see the index reclaim the 50-day SMA line. Until then, it is expected strong selling pressure near the medium-term moving average line. The research house is sticking to its negative bias until the stop-loss is triggered.
Traders should hold on to the short positions initiated at 20,836 pts or the closing level of 12 Jul. To mitigate the trading risks, the stop-loss is set at 21,000 pts.
The immediate support is moved to 20,543 points (14 July’s low) followed by 20,285 points (15 July’s close). The immediate resistance is eyed at 21,000 points, followed by the higher resistance of 21,506 points (the close of 6 July)
