Keep long, in line with the resilient bullish bias above 10,745 pts. Yesterday was a bullish session for the SGX FTSE China A50, as it rebounded by 300 pts to 11,470 pts and charted a white candle. The index is currently testing the 20-day SMA line, and the bullish bias – in the appearance of 3 Jul’s “Bullish Harami” candlestick pattern – continues to exert itself. Based on the immediate buying activity, chances are high that the upside movement may still extend further. Overall, our positive view remains in play.

The daily chart shows that the SGX FTSE China A50 is resilient above the 10,745-pt mark. As long as this level is not taken out, it is best that traders continue to stay in long positions. For risk-minimisation purposes, we advise setting a stop-loss below the aforementioned 10,745-pt level. This is in line with our initial long call above 11,570 pts on 23 Jul.

We keep the immediate support at the 11,150-pt mark, which was the low of 20 Jul. This is followed by the critical support at the 10,745-pt level, ie the low of 3 Jul’s “Bullish Harami” pattern. On the flip side, the immediate resistance is maintained at 11,570 pts, which is located at the high of 29 Jun. For the next support, look to 12,000 pts, or the high of 25 Jul.

Source: RHB Securities Research - 10 Aug 2018