HSI Futures Seen as Consolidating

With the weak momentum seen in HSI Futures, RHB Research has maintained “short positions on this derivatives.

The HSIF managed to recoup its intraday losses and bounced off the 20,543-point support to close at 20,561 points yesterday. The index started the session at 20,626 points. At one point, it fell to the 20,341-point day low. It then rebounded to close at 20,561 points – printing a long lower shadow. In the evening, the index rebounded 86 points and last traded at 20,647 points. The latest price action reaffirms the strong support that formed at 20,543 points. Conversely, lower support was also seen at 20,285 points. As long as the lower support remains intact, the One White Soldier bullish candlestick will be deemed as valid. With the bullish reversal candlestick, the HSIF is attempting to form an interim base from which to stage a technical rebound. If it crosses above the 21,000-point resistance, a bullish bias will emerge. For now, since the RSI is still hovering below the 50% threshold and showing weak momentum, it is expected more sideways movements before the index re-tests the immediate resistance. The research house is keeping its negative bias until the stop-loss mark is breached.

Traders should retain the short positions initiated at 20,836 points or the closing level of 12 July. To mitigate the trading risks, the stop-loss threshold is set at 21,000 points.

The immediate support stays at 20,543 points – 14 July’s low – and is followed by 20,285 points, ie the close of 15 July. The
immediate resistance sticks at 21,000 points with the higher hurdle at 21,506 points or the close of 6 July.

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