The HSIF was blocked by the 20-day SMA line on Tuesday, plunging 309 pts to close lower at 15,765 pts.
RHB Retail Research in a note today (Jan 31) said the index began yesterday’s session at 16,073 pts. Initially, it rose to the 16,106 pts day’s high.
The momentum then reversed, with the index falling to the 15,709 pts day’s low and closing at 15,765 pts – breaching the 15,829 pts support. In the evening, the negative momentum followed through, with the index last trading at 15,702 pts.
The latest price action confirms that the 20-day SMA line is acting as resistance. The short-term SMA line continues trending lower – dragging the HSIF southwards.
Recall that in a bearish setup, the support tends to be weak. Following the bearish breakout and falling below the 20-day SMA line, the index is resuming its downward movement.
It will likely correct towards the 15,000-pt level. Since the bears remain in the driver seat, they retain their bearish trading 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 stop-loss threshold is set at 17,000 pts.
Following the bearish breakout, the nearest support is adjusted to 15,000 pts, followed by 14,000 pts. On the upside, the immediate resistance is pegged at 16,400 pts, followed by 17,000 pts.
