The HSIF underwent strong selling pressure just before the January futures contract expired, and fell 385 pts to settle at 22,280 pts.
The index started off Monday’s session at 22,670 pts.
After hitting the day’s high of 22,703 pts, the momentum reversed into the negative and dragged the index towards the day’s low of 22,277 pts before the close.
In the evening, the Feb futures contract retraced and last traded at 22,194 pts.
This latest negative price action points to the formation of a Bearish Engulfing ie Bearish Reversal candlestick. This, coupled with the RSI being in overbought territory now, shows that the index is showing signs of fatigue.
RHB Retail Research said as it may be headed for a correction, the HSIF may pull back to retest the 22,000-pt level. Breaching the immediate support may negate the bullish setup. Before a bearish breakout happens, though, we will hold on to a positive trading bias.
Traders should stick to the long positions initiated at 18,617 pts (30 Nov 2022’s close). To mitigate the trading risks, the trailing stop is pegged at 22,000 pts.
The immediate support remains unchanged at 22,000 pts, followed by 20,857 pts or the low of 5 Jan. Meanwhile, the immediate resistance is still at 23,000 pts, followed by 23,500 pts.
