RHB Research has maintained short positions on HSI futures.
The HSIF underwent a correction for a sixth successive session, after it fell 317 points to close weaker at 16,408 points – trading at an 11-year low. On Thursday, the index opened at 16,728 points. After the opening, it progressed lower to reach the day’s low of 16,384 points before the close. During the evening session, it rebounded 273 points and last traded at 16,681 points. The latest price action indicates that sentiment has become extremely weak. As the RSI continues to trend lower, the negative momentum is getting stronger. Hence, it should breach the 16,400-point support to test the lower support at the 15,800-point level. Since the bears are their strongest, any attempt of a rebound should be blocked by the 17,325-point resistance. With the downside risk heightened, the research house retains the negative bias.
Traders should hold on to the short positions initiated at 17,221 points, or the close of 10 October. To manage the trading risks, the initial stop-loss is fixed at 18,205 points.
The immediate support remains unchanged at 16,400 points, followed by 15,800 points. Conversely, the immediate resistance is still pegged at 17,325 points – 11 Oct’s high – followed by 17,798 points, or the high of 10 Oct.