Hua Hong Semiconductor's consolidation at high levels remains intact, the key is whether it can break through 114 or retest 100.

The closing price on the previous day (29th) was 108.100; the overall structure remains strong, with the share price fully above all major moving averages, and the short-term trend still in a consolidation phase within an uptrend. The previous day’s price of 108.100 held above the 5-day line at 107.590 and was also located between the middle and upper Bollinger Bands, indicating that the upward momentum remains intact but is starting to turn cautious.

Looking at the semiconductor sector, the market was generally weak the previous day, with Hua Hong Semiconductor (01347) falling by 4.59%, $SMIC (00981.HK)$ Slight decline of 0.38%, $COWELL (01415.HK)$ Slight decline of 0.25%. Technical signals are highly consistent: the summary technical indicators for all three stocks are either 'Sell' or 'Strong Sell,' indicating overall technical pressure on the sector.

Notably, despite falling stock prices and moving average systems issuing sell signals, the MACD indicators for all three stocks show buy signals, presenting an internal divergence among technical indicators. This indicates that Hua Hong's consolidation at higher levels is occurring in a complex environment where the sector as a whole is weak, with bearish technical ratings, but momentum indicators (MACD) hinting at rebound potential. Such divergence often implies short-term uncertainty, intensifying the tug-of-war between bulls and bears, also explaining the extreme divide in market views between 'sanctions concerns' and 'bottom-fishing opportunities.'

Comments focus on two directions: one is concern over U.S. sanction news, worrying that limited equipment supply will impact fundamentals, even leading to bearish expectations of 100 or 90 yuan; on the other hand, some capital has started considering buying at lower levels or betting on a rebound, including strategies such as watching for buy points at the 5-day line or purchasing at the close. Meanwhile, some short-term funds have already taken short positions in the 112 to 113 range and exited profitably.

Market sentiment is clearly divided, with some investors turning cautious or even panicking, while others see it as a pullback opportunity, reflecting that the current position has entered a tug-of-war zone rather than a one-sided trend.

Common questions focus on three points:

First, whether the sanctions news will cause the stock price to continue falling;

Second, whether the current price is suitable for bottom fishing;

Third, whether there is still a chance for a short-term rebound above 113.

Technically speaking, these questions revolve around the watershed level of 107.590.

Technically, 107.590 is a key short-term support level. If it holds, the overall uptrend structure remains intact, providing an opportunity to challenge the 114.091 resistance again. Once this level is broken through, there will be conditions to further test 119.600.Conversely, if it breaks below 107.590, it would indicate short-term weakness, significantly increasing the likelihood of a retest at 100.960, which could resonate with some bearish voices in the market.

At this stage, the risk-reward ratio is neutral to观望 (cautiously observing). The highs have not been broken, and the lows have not been breached, representing a typical range-bound consolidation pattern. The strategy's focus should be on waiting for directional confirmation rather than prematurely taking heavy positions.

Reply to some investors' views:

@機智嘅散戶 Shorting near 112 falls under resistance zone trading; the short-term impact has already been reflected.

@我的世界有光 The logic differs between long-term and short-term. In the short term, it’s crucial whether 107.590 can hold.

@我有名字了 The current price is near the watershed level, and without clear signals, it is not advisable to rush in at the bottom.

Based on the above analysis, the strategies for deployment can be divided into the following main approaches:

Key deployment: If holding above 107.590 and breaking through 114.091, the short-term target could extend to 119.600; however, if it falls below 107.590, be mindful of a potential retest at 100.960.

Strategy One | Deploy after holding 107.590

$CIHUAHO@EC2610A.C (20859.HK)$ | Strike Price 108.88 | Actual Leverage 3.1x | Close to current price, suitable for following an uptrend after stabilization, with relatively controllable volatility

$GJHUAHO@EC2607A.C (27277.HK)$ | Strike Price 116.98 | Actual Leverage 4.7x | Moderately out-of-the-money, suitable for amplifying returns when the uptrend continues

$CIHUAHO@EC2606B.C (27139.HK)$ | Strike Price 128.88 | Actual Leverage 5.9x | Higher leverage, suitable for capturing extended upside moves after a breakout

Strategy Two | Follow the trend after breaking through 114.091

$BIHUAHO@EC2607B.C (24178.HK)$ | Strike price 116.88 | Actual leverage 4.6x | Close to resistance level, suitable for follow-up after confirmation of breakout

$BIHUAHO@EC2609D.C (27273.HK)$ | Strike price 133.00 | Actual leverage 3.8x | Far out-of-the-money, suitable for viewing upward extension above 119

$UBHUAHO@EC2608A.C (24990.HK)$ | Strike price 140.09 | Actual leverage 4.3x | Higher flexibility, suitable for aggressive positioning after breakout

Strategy Three | Deployment upon weakness after falling below 107.590

$BIHUAHO@EP2607C.P (25020.HK)$ | Strike price 88.00 | Actual leverage 4.6x | Close to lower range, suitable for capturing pullback near 100 after support breaks

$CTHUAHO@EP2607A.P (25315.HK)$ | Strike price 87.95 | Actual leverage 4.8x | Higher leverage, suitable for aggressive deployment during accelerated weakening

$MSHUAHO@EP2607A.P (25270.HK)$ | Strike price 79.99 | Actual leverage 5.5x | Deep out-of-the-money, suitable for expecting larger pullbacks

For more market analysis, stay tuned to Jenny's daily updates on 'Hong Kong Stock Warrants'!

Reminder: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. The market data, opinions, and analysis contained herein may change at any time without prior notice. We are not responsible for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive assessment of asset performance should be conducted using additional data. Decisions to trade should not be based solely on this article. Please note that past performance is not indicative of future results.

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