More potential upside bias in the later sessions, stay long. At yesterday’s closing, the SGX FTSE China A50 ended at 11,757.50 and posted a 25-pt gain. Presently, we believe that buyers are still dominating market sentiment. Based on the current technical landscape, chances are high that the bullish bias in the appearance of 3 Jul’s “Bullish Harami” candlestick pattern could still be extended further. We highlight that market strength is encouraging, given that the 14-day RSI indicator is hovering above 50 pts at 54.16 pts. This enhances our positive view.

As the daily chart above suggests more potential upside bias in the later sessions, it is best that traders maintain long positions. In order to miminimise the downside risk, we advise a stop-loss below the 10,745-pt threshold. For the record, our long call was triggered on 23 Jul. This was after the SGX FTSE China A50 had breached above 11,570 pts.

We set the immediate support at 11,570 pts, which is located at the high of 29 Jun. If this level is taken out, the following support is pegged at 10,745 pts, or the low of 3 Jul’s “Bullish Harami” pattern. Conversely, our immediate resistance is maintained at 11,985 pts, which was the low of 31 May’s “Bullish Engulfing” pattern. This is followed by the 12,640-pt resistance, ie the high of 7 Jul.

Source: RHB Securities Research - 1 Aug 2018