Initiate long positions above the 30,650-pt level. The HSIF formed a long white candle yesterday. It surged 504 pts to close at 30,899 pts, off the session’s high of 30,950 pts and low of 30,364 pts. The index successfully climbed above the 21-day SMA line and registered its highest close in nearly two weeks, implying that sentiment has turned positive. This can be viewed as a continuation of buyers extending the upward momentum from the “Bullish Engulfing” pattern that was formed on 30-31 May. Yesterday’s closing also triggered our trailing stop, which we previously recommended investors to set at the 30,600-pt threshold.

Presently, the immediate support is seen at 30,650 pts, situated near the midpoint of 4 June’s long white candle. The next support would likely be at 29,847 pts, ie the low of 31 May’s “Bullish Engulfing” pattern. Towards the upside, we are eyeing the immediate resistance at 31,499 pts, ie the high of 15 May. The next resistance is anticipated at the 32,000-pt round figure, also situated near the high of 21 Mar.

Hence, we advise traders to initiate long positions above the 30,650-pt level. A stop-loss can be set below the 29,847-pt threshold in order to minimise downside risk.

Source: RHB Securities Research - 5 Jun 2018