The HSIF is poised for a pullback as intraday profit-taking was observed after reaching a peak yesterday.
RHB Retail Research in a note today (May 21) said it settled 94 pts higher at 19,636 pts.
The index began trading at 19,543 pts and climbed strongly to an intraday high of 19,772 pts before partially writing off its gains before the close.
During the evening session, selling pressure persisted, with the HSIF falling by 138 pts – it last traded at 19,498 pts.
The late intraday selling pressure signals a pullback ahead, as the near-term bullish momentum has faded, supported by a decline in the RSI to 77% from 82% – still in overbought territory – which indicates weakening momentum.
The upcoming pullback is likely to be capped at the 18,790-pt support before resuming its uptrend towards 20,000 pts.
Despite the anticipated near-term pullback, they maintain their positive trading bias, which is based on the overall bullish outlook.
Traders should retain the long positions initiated at the close of 25 Apr or 17,342 pts.
To manage the trading risks, the stop-loss threshold is set at 18,200 pts.
The immediate support is set at 18,790 pts – 13 May’s low – and followed by the abovementioned 18,200 pts.
The immediate resistance is now at 20,000 pts and followed by the 21,000-pt level.
