With the strong selling pressure yesterday, RHB Research has continued to maintain short positions on HSI futures.
The HSIF continued to drift lower yesterday as it dipped into oversold territory. The index started off at 17,823 points and, after the opening, progressed lower until it reached 17,176 points before closing at 17,248 points. During the evening session, due to the RSI being in the oversold region, the HSIF staged a technical rebound and last traded at 17,663 points. The latest price action affirmed that 17,500 points is acting as a strong support with sturdy buying pressure emerging. However, the latest candlestick is still in progress and the index has not formed a “higher high” pattern yet. It is still premature to conclude that a bullish reversal pattern has formed. If the HSIF manages to break past the 18,000-point psychological resistance, there might be a strong technical rebound towards 18,225 points. RHB Research will retain the bearish bias until the immediate resistance is breached.
Traders should hold on to the short positions initiated at 19,391 points or the close of 2 September. To manage the trading risks, the stop-loss threshold is revised to 18,000 points from 18,500 points.
The immediate support sticks at 17,500 points, followed by 17,000 points. The immediate resistance is revised to 18,000
pts and followed by 18,225 points, i.e. the high of 23 September.
