The HSIF experienced strong selling pressure yesterday, falling 374 pts to close at 15,876 pts.
RHB Retail Research in a note today (Jan 17) said the index started yesterday’s session at 16,240 pts. It then plunged to a 15,826-pt low before closing in negative territory – falling below the 16,000-pt support level.
During the evening session, the index shed another 83 pts and was last traded at 15,793 pts. The latest bearish breakout showed that the bears have a stronger grip on the index.
This, coupled with the RSI trending downwards, indicate that negative momentum is accelerating – we expect a follow-through price action to test the next support level at 15,500 pts.
The correction will extend until the index is able to chart a bullish reversal candlestick. The breakout also echoes our view that the support level will be weak in a bearish setting.
As the bears are still in control, we hold on to the negative bias. Traders are advised to keep the short positions initiated at the close of 8 Jan (16,253 pts).
To manage the trading risks, the initial stop-loss is set at 17,600 pts.
After the bearish breakout, the first support level is revised to 15,500 pts, followed by 15,000 pts, while the immediate resistance is adjusted to 16,500 pts, followed by 16,800 pts.
