Keep long positions, in line with the ongoing bullish bias. The SGX FTSE China A50 started the week on a positive note, as it rebounded by 27.50 pts to 11,732.50 pts. Technically speaking, we believe the bulls are still dominating market sentiment. In the absence of any strong downside developments, this indicates the bullish bias in 3 Jul’s “Bullish Harami” candlestick pattern remains firmly in play. This is also supported by the index is trading steadily above the 20-day SMA line, which points towards a positive outlook. This enhances our positive view.

Based on the daily chart, we believe the opportunities are still leaning more towards the buyers. As such, it is best that traders maintain long positions. For risk-minimisation purposes, we advise setting a stop-loss below the 10,745-pt mark. This is in line with our initial long recommendation on 23 Jul after the SGX FTSE China A50 successfully breached above the 11,570-pt level.

The 11,570-pt mark, ie 29 Jun’s high, is maintained as our immediate support. If this level is taken out, the following support is found at 10,745 pts, which was the low of 3 Jul’s “Bullish Harami” pattern. On the flip side, our immediate resistance is kept at 11,985 pts, or the low of 31 May’s “Bullish Engulfing” pattern. The next resistance is pegged at 12,640 pts, which was derived from 7 Jul’s high.

Source: RHB Securities Research - 31 Jul 2018