Maintain long positions. The HSIF formed a long black candle last Friday. During the intraday session, it plunged to a low of 30,798 pts, before ending at 30,840 pts for the day. Unsurprisingly, last Friday’s long black candle can be viewed as a result of profit-taking activities following the recent surge seen in the last two weeks. Technically speaking, as the index has managed to stay above the 30,650-pt support mentioned previously, it suggests that the near-term upside move is not over yet. Moreover, the 21-day SMA line is now pointing upwards, indicating that the near-term positive sentiment remains unchanged.

Based on the daily chart, the immediate support level is seen at 30,650 pts, ie near the midpoint of 4 June’s long white candle. The next support would likely be at 29,847 pts, which was the low of 31 May’s “Bullish Engulfing” pattern. Towards the upside, the immediate resistance level is now anticipated at 31,544 pts, defined from the high of 7 Jun. If this level is taken out, the next resistance is maintained at the 32,000-pt round figure, set near the high of 21 Mar as well.

Thus, we advise traders to stay long, in line with our initial recommendation to have long positions above the 30,650-pt level on 5 June. A trailing-stop can be set below the 30,650-pt threshold as well in order to limit the risk per trade.

Source: RHB Securities Research - 11 Jun 2018