HSI Futures’ Negative Momentum Picking Up Steam

With the bearish momentum is still in control, RHB Research has once again maintained “short” positions on HSI futures.

The HSIF underwent strong selling pressure last Friday, and fell below the 20,285-point support to close at 20,094 points, thereby negating the One White Soldier reversal pattern. It opened at 20,582 points. After touching the day’s high of 20,660 points, it reversed direction and dropped to the day’s low of 20,017 points before closing in negative territory. In the evening, it declined 63 points and last traded at 20,031 points. The latest price action saw the index charting a fresh “lower low” with a “lower high”, and forming a fresh Bearish Marubozu – which means that the bears are firmly in control. As the RSI is turning lower below the 50% threshold, the negative momentum is picking up steam now. A follow-through price action would see the index breaching below the 20,000-point immediate support to test the lower support of 19,600 points. Meanwhile, the 20-day SMA line is trending lower too, exerting strong selling pressure on the index. As the bearish structure is intact, the research house is holding on to its negative bias.

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

The immediate support has been revised to 20,000 points, followed by 19,600 points. Meanwhile, the first resistance has been changed to 20,660 points, followed by 21,000 points

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