Bearish Pattern Formed for HSI Futures

Bearish momentum is at play now, RHB Research has maintained “short” positions on HSI futures.

The HSIF experienced strong selling pressure yesterday, as it retreated sharply to close at 19,566 points. The index started off Wednesday at 20,005 points. It then progressed lower throughout the session, reaching the 19,427-point session low before the close. During the evening session, the index recouped 214 points and last traded at 19,780 points. The latest bearish candlestick or Bearish Marubozu reaffirms our view that the bearish structure is intact. Strong resistance has formed at 20,200 points and, if the HSIF continues to trade below the immediate resistance, it should continue to chart a “lower high” with “lower low” bearish pattern. The index will re-test the recent low at 19,455 points, followed by the 19,063-point support. As the negative momentum is in play now, the research house is keeping to its bearish bias.

Traders are advised to retain the short positions initiated at 20,836 points or 12 July’s close. To manage the trading risks,
the stop-loss threshold is placed at 20,200 points.

The immediate support sticks at 19,455 points – 3 August’s low – and is followed by 19,063 points, i.e. 10 May’s low. Conversely, the immediate resistance is kept at 20,200 points and followed by 21,000 points.

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