Hang Seng Index Futures : Bearish Momentum Gaining Traction

The HSIF reverted to a correction on Wednesday, losing 307 pts to close at 18,482 pts – firmly below the 20-day SMA line (18,856 pts).

RHB Retail Research in a note today (May 30) said the index began yesterday’s session at 18,791 pts. After touching a high of 18.812 pts, it fell to the 18,429-pt intraday low before the close. In the evening it fell 73 pts and was last traded at 18,409 pts.

The bearish price action, coupled with the rounding down of the RSI, suggests that negative momentum is picking up. RHB expects a follow-through of negative price action to bring the index to 18,200 pts. As mentioned in their previous report, the bulls are expected to try to hold on to the immediate support level.

A fall below this level would open the doors for further correction towards the 50-day SMA line. Despite the index charting a fresh “lower low”, RHB will hold on to the positive trading bias – unless the 18,200-pt level is breached.

Traders are recommended to keep the long positions initiated at the close of 25 Apr (17,342 pts). To minimise the trading risks, the stop-loss threshold is placed at 18,200 pts.

The first support is marked at 18,200 pts, followed by 17,500 pts. The first resistance is pegged at 19,000 pts, followed by 20,000 pts.

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