Last Friday, the Hang Seng Index Future’s April futures contract breached past the 20,228-pt resistance to close stronger at 20,481 pts.
RHB Retail Research said today (April 3) cited during Friday’s session, the index opened at 20,370 pts and rose to test the day’s high of 20,793 pts before pulling back to close at 20,481 pts.
In the evening, the index retreated 128 pts and last traded at 20,353 pts.
The latest session saw the formation of a “long upper shadow”. Coupled with the bearish candlestick during the evening session, the 50-day SMA line has become a resistance.
Nevertheless, the index is trading above the 20-day SMA line, and strong support should be found at the 19,500-pt level. Furthermore, the RSI has climbed above the 50% threshold, suggesting a strong positive momentum is in play.
As the index has broken past the stop-loss point and charted a “higher high” bullish pattern, RHB shifts over to a positive trading bias and has closed out the short positions (initiated at 21,643 pts ie the 3 Feb’s close) after the trailing-stop at 20,228 pts was breached.
Conversely, initiate long positions at the close of 31 Mar, ie 20,481 pts.
To mitigate the trading risks, we set an initial stop-loss at 19,500 pts. The immediate support is revised higher to 19,500 pts, followed by 18,846 pts ie the low of 20 Mar.
Meanwhile, the immediate resistance is pegged at 20,750 pts and followed by 21,750 pts.
