Traders are advised to stay long, as the 1-month bullish bias remains intact. Yesterday’s session was led by the sellers, as we saw the SGX FTSE China A50 dropping 282.50 pts to 11,475 pts. While it did chart a black candle that crossed below the previous 11,570-pt support, this does not change our positive view, given that no strong downside development has been sighted yet. At this juncture, we view this minor decline as the index merely taking a normal breather below 11,985 pts. Overall, the bulls are still dominating market sentiment.

As long as the SGX FTSE China A50 is able to hold above the 10,745-pt support, this implies the 1-month bullish bias is still in play. Hence, it is best that traders maintain long positions. In order to minimise the downside risk, we recommend setting a stop-loss below the aforementioned support. This follows our initial long call above the 11,570-pt mark on 23 Jul.

Our immediate support is now at 11,150 pts, which is located at the low of 20 Jul. If this level is taken out, the following support is seen at 10,745 pts, ie the low of 3 Jul’s “Bullish Harami” pattern. On the flip side, we set the immediate resistance at 11,570 pts, which was the high of 29 Jun. This is followed by the next resistance at 11,985 pts, or the low of 31 May’s “Bullish Engulfing” pattern.

Source: RHB Securities Research - 2 Aug 2018