HSI Futures to Challenge 19,455-Point-Level

RHB Research has retained its short positions on HSI futures.

The HSIF underwent a strong rebound on the eve of the public holiday, and gained 512 points to close at 19,363 points last Friday – while keeping the 19,455-point resistance in its sights. The index opened at 18,856 points, then retraced to test the day’s low of 18,722 points. Strong support at 18,774-point level lifted the index towards the day’s high of 19,413 points before the close. In the evening, it shed 99 points and last traded at 19,264 points. The price action reaffirmed that 18,774 points is acting as the strong support now.

The index may stay above the threshold for now and try to cross above the immediate resistance. If it can push past the immediate resistance, strong follow-up bullish pressure may follow. Otherwise, the bears may drag the index again towards the support. For now, both 20-day and 50-day SMA lines are trending lower, indicating that the bearish set-up is firmly in place. As such, the research house will hold on to a bearish bias until a bullish breakout happens.

Traders should hold on to the short positions initiated at 19,391 points, ie the close of 2 September. To mitigate the trading risks, the stop-loss threshold is placed at 19,455 points.

The immediate support remains unchanged at 18,774 points – 7 September’s low – and is followed by 18,134 points or the low of 16 March. The immediate resistance is now at 19,455 points – 3 August’s low –followed by 20,000 points.

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