Hang Seng’s Bearish Setup Firms Up

The HSIF drifted lower on Wednesday, as the negative momentum accelerated. It ceded 365 pts and closed at 19,071 pts.

RHB Retail Research said in the morning, the index opened at 19,422 pts and plunged to the day’s low of 19,025 pts before closing. In the evening, it declined 193 pts and last traded at 18,878 pts.

RHB, in a note today (May 25), said the latest “lower low” bearish candlestick confirms that the market sentiment is negative now. This, coupled with both 20-day and 50-day SMA lines trending lower, should lead to another downward leg for the index – eyeing to close below the 19,000-pt support.

As such, the HSIF may retrace and test the next support of 18,500 pts. The correction should continue until RHB sees a candlestick with a long lower shadow or a bullish reversal pattern. As the trend is still bearish, RHB maintains a negative trading bias.

Traders should retain the short positions initiated at 19,924 pts or the close of 24 Apr.

To minimise the trading risks, the stop-loss is set at 20,500 pts. The immediate support is at 19,000 pts, followed by 18,500 pts.

Conversely, the immediate resistance is at 20,000 pts, followed by 20,500 pts.

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