Continue to stay long, as the 1-month upside movement remains intact. The SGX FTSE China A50 ended yesterday’s session at 11,390 pts and posted a 355-pt gain. It charted a white candle that breached above the previous 11,150-pt resistance, which implied the session was led by the buyers. As a result, the index jumped near the 20-day SMA line. Based on the immediate positive momentum, chances are high for the bullish bias to extend further. Overall, we believe the 1-month upside development remains in play.

The current technical landscape implies that market sentiment is resilient above the 10,745-pt support – an indication of more opportunities for buyers. Hence, traders are advised to stay in long positions, with a stop-loss pegged below the aforementioned 10,745 pts – this is in order to minimise the downside risk. For the record, our long call was triggered above the 11,570-pt level on 23 Jul.

Our immediate support is now at 11,150 pts, which was the low of 20 Jul. If this level is taken out, the following support is seen at 10,745 pts, or the low of 3 Jul’s “Bullish Harami” pattern. On the flip side, we set the immediate resistance at 11,570-pt mark, which is located at the high of 29 Jun. This is followed by the 12,000-pt resistance, ie near the high of 25 Jul.

Source: RHB Securities Research - 8 Aug 2018