RHB Research has maintained short positions on HSI futures.
The HSIF continued to drift lower on the eve of the public holiday, falling 130 points to close at 17,080 points. It opened Monday’s session at 17,211 points, and closed in negative territory after trading between 17,326 points and 16,927 points. However, sentiment improved in the evening session, with a rebound lifting it to close at 17,343 pts. Monday’s price action suggests that the 17,000-point level is now acting as a strong support. The index may climb to test the 17,650-point immediate resistance level – a breach of this level would chart a “higher high” pattern, indicating that bullish momentum has strengthened. Recall that since the index falling below the 20-day SMA line in Sep, it has not formed a “higher high” yet. While the evening session’s price action suggests there could be a technical rebound soon, we think the index will not cross above the 20-day SMA line. No change to negative bias until there is a bullish breakout.
Traders should keep the short positions initiated at 19,391 points or the close of 2 September. To mitigate the trading risks, the stop-loss is set at 18,000 points.
The immediate support is formed at 17,000 points, followed by 16,400 points. On the upside, the immediate resistance is
seen at 17,650 points, followed by 18,000 points
