HSIF Rejected By 50-Day SMA Line

The HSIF’s upside movement continued to blocked by the 50-day SMA line despite managing to climb 36 pts on Tuesday to close at 19,836 pts. Yesterday, the index started off at 19,941 pts and rose to test the day’s high of 20,257 pts.

However, the index was once again rejected by the 50-day SMA line and pulled back in the afternoon to close at 19,836 pts. In the evening, the index fell 212 pts and last traded at 19,624 pts.

RHB Retail Research observed that the index has been moving in a counter-trend fashion recently, eyeing to cross above the 50-day SMA line. As mentioned in the previous note, we expect a strong resistance to exist at 20,500 pts and the 20,800-pt level.

The bears have the technical advantage as long as the index is trading below the 20,800-pt level – any attempt of a rebound would be capped by the resistance and followed by a downward correction.

Pending the resumption of a bearish movement, RHB holds on to their negative bias. Traders are advised to hold on to the short positions initiated at the close of 24 Apr ie 19,924 pts.

To mitigate the trading risks, the initial stop-loss is set at 20,800 pts.

The immediate support is set at 19,500 pts, followed by 19,000 pts. On the flipside, the nearest resistance is pegged at 20,500 pts, followed by 20,800 pts.

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