RHB Research has maintained short positions on HSI futures.
After falling for six consecutive sessions, the HSIF staged a rebound last Friday, climbing 196 points to close higher at 16,600 points – a level above the 16,400-point immediate support. The index initially started off the session at 16,426 pts. After trading in the range of 16,134 points and 17,037 points, it closed higher than the opening price and charted a bullish candlestick. During the evening session, it retraced 205 pts and last traded at 16,395 points. Friday’s price action suggests the selling pressure is tapering, as the HSIF attempts to build an interim base near the immediate support. Meanwhile, the RSI has been observed printing a “higher low”, indicating a positive divergence with the price chart. As such, the technical signals suggest there is a possibility that the index may stage a technical rebound in the coming sessions. However, should the HSIF breach the immediate support, it may extend the downside correction. At this juncture, the research house still holds on to a negative bias until bullish breakout happens.
Traders should retain the short positions initiated at 17,221 pts or the close of 10 October. To minimise the trading risks, the stop-loss threshold is revised to 17,325 pts from 18,205 pts.
The immediate support sticks at 16,400 points, followed by 15,800 points. On the flip side, the immediate resistance remains unchanged at 17,325 points – 11 October’s high – and is followed by 17,798 points, ie the high of 10 October.
