Hang Seng Whipsaws Near 20-day SMA Line; Bearish Setup Remains

After the HSIF crossed above the 20-day SMA line, the bullish momentum slowed down after the index pulled back 138 pts to close at 19,900 pts.

RHB Retail Research cited in the evening session, the index fell another 36 pts and last traded at 19,864 pts.

The latest session sees the index charting a candlestick with a long upper shadow, suggesting that the bears still have the technical advantage. In the event the selling pressure increases in the coming session where the index drops below the 20-day SMA line, expect the HSIF to resume the correction towards the recent low of 18,846 pts.

Towards the upside, a strong resistance has formed at the 20,750-pt level. Despite the index managing to climb for three previous sessions consecutively, the technical signals show that the bearish setup remains intact.

RHB holds on to their negative bias until a bullish breakout breaches above the 20,750-pt threshold.

Traders should retain the short positions initiated at 21,643 pts (3 Feb’s close).

To mitigate the trading risks, the trailing-stop is placed at 20,750 pts.

The nearest support is marked at 18,846 pts (20 Mar’s low), followed by the subsequent support at 18,000 pts. The immediate resistance pegged at 20,750 pts, followed by the higher resistance of 21,350 pts.

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