Maintain long positions. The HSIF formed a “Doji” candle yesterday. It closed at 31,042 pts, after oscillating between a high of 31,237 pts and low of 30,873 pts. Still, the appearance of yesterday’s “Doji” candle indicates that buyers may be taking a breather after the recent gains. As the index is still trading above the 21-day SMA line, this implies that the near-term positive sentiment stays intact. Overall, we believe the rebound – which started from 31 May’s “Bullish Engulfing” pattern – may continue.

Based on the daily chart, the immediate support level is seen at 30,650 pts, determined near the midpoint of 4 June’s long white candle. The next support is maintained at 29,847 pts, situated at the low of 31 May’s “Bullish Engulfing” pattern. Towards the upside, we are eyeing the immediate resistance level at 31,544 pts, ie the high of 7 Jun. The next resistance would likely be at the 32,000-pt round figure, also set near the high of 21 Mar.

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 downside risk.

Source: RHB Securities Research - 13 Jun 2018