The momentum on the HSIF turned negative on Wednesday, and it retraced by 86 pts to close at 19,699 pts, thereby drifting below the 50-day SMA lines.
RHB Retail Research, in a note today (May 11), said the index opened Wednesday’s session at 19,782 pts.
Initially, it attempted to stage a rebound but was capped by the day’s high of 19,871 pts.
Then, it fell to the day’s low of 19,626 pts before the negative closing. In the evening, the HSIF rebounded by 26 pts and last traded at 19,725 pts.
The latest “lower low”, coupled with the 50-day SMA line that is down trending, is enhancing the bearish setup.
In the event the index breaches the 19,500-pt support, this would dent market sentiment and open the door for a further correction. The RSI falling below the 50% threshold also affirms that the negative momentum is in play now.
Premised on this, RHB sticks to a bearish bias. Traders should remain in the short positions initiated at 19,924 pts or the close of 24 Apr.
To manage the trading risks, the initial stop-loss is fixed at 20,800 pts. The immediate support is at 19,500 pts, followed by 19,000 pts. Towards the upside, the nearest resistance is still at 20,500 pts, followed by 20,800 pts.
