HSI Futures Going Through Consolidation

Again, RHB Research has maintained “short” positions on HSI futures.

The HSIF’s latest technical rebound halted at the 50-day SMA line, as it pulled back 190 points from Monday’s session to close at 20,658 points. The index initially started off Tuesday’s session stronger at 20,855 points and rose towards the day’s high of 20,975 points. However, selling pressure near the 50-day SMA line proved too strong, causing the index to retreat towards the day’s low at 20,547 points before closing in negative territory. In the evening, it recouped 255 pts and last traded at 20,913 points. The latest price action suggests that the index may be resorting to consolidate below the 50-day SMA line. If the consolidation takes a longer timeframe, it may retrace towards 20,543 points, followed by the 20,285-point support. At this stage, the 21,000-point level has become a strong psychological resistance. Breaching this threshold should see the index climb above the 50-day SMA line and resume its upward movement. However, before this happens, the index is likely to continue posing a bearish setup, and as such, the research house is keeping to its bearish bias until the stop-loss is breached.

Traders are advised to retain the short positions initiated at 20,836 points, or the closing level of 12 July. To manage the
trading risks, the stop-loss is fixed at 21,000 points.

The immediate support stays at 20,543 points (14 July’s low), followed by 20,285 points (15 July’s close). On the flip side, the immediate resistance is pegged at 21,000 points, followed by 21,506 points ie the close of 6 July.

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