HSI Futures Under Correction Stage

Despite the rebound shown yesterday, RHB Research has maintained short positions on HSI futures.

The HSIF staged a mild rebound during Tuesday’s session, rising 179 points to close at 18,753 points. It started the session at 18,568 pts. After trading between 18,872 points and 18,519 points, it closed in positive territory. Although the index attempted to build an interim base – printing a bullish candlestick – the body was narrow, and it has not formed a “higher high” yet. It is premature to tell if the index will be able to stage a counter-trend rebound. It is also observed that the index is trading below the 20-day SMA line. This, coupled with the still-intact Bearish Marubozu of 14 Sep, signals that the index is still in the correction phase. It is likely that the index will continue trending lower until it is able to form a bullish reversal candlestick near 18,450 points or 18,134 points. The research house retains its bearish bias until it stages a bullish breakout at the 19,455-point resistance level.

Traders should stick with the short positions initiated at 19,391 points, or the close of 2 September. To minimise the trading risks, the stop-loss is set at 19,455 points.

The immediate support remains at 18,450 points, followed by 18,134 points – the low of 16 March. Conversely, the immediate resistance is still at 19,150 points – 5 Sep’s close – followed by the higher resistance at 19,455 points (the low of 3 Aug)

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