Initiate long positions above the 28,060-pt level. After posting five positive candles in a row, the HSIF ended lower to form a black candle last Friday. It closed at 28,213 pts, off its high of 28,646 pts and low of 28,173 pts. Technically, last Friday’s black candle should merely be viewed as a result of profit-taking activities following recent gains. We think the near-term rebound remains valid as long as the HSIF does not erase the gains from 3- 9 Aug’s positive candles. To recap, 9 Aug’s closing has triggered our previous trailing-stop recommendation at the 28,334 threshold – which has captured part of the profit. Note that we initially advised traders to initiate short below the 30,800-pt level on 18 Jun.

For now, we are eyeing the immediate support at 28,060 pts, ie the low of 9 Aug. The crucial support is anticipated at 27,444 pts, determined from the recent low of 3 Aug. To the upside, the immediate resistance is seen at 29,113 pts, obtained from the high of 26 Jul. If a breakout arises, the next resistance would likely be at the 30,000-pt psychological mark.

Hence, we advise traders to initiate fresh long positions above the 28,060-pt level. In the meantime, a stop-loss can be set below the 27,444-pt threshold in order to minimise downside risk.

Source: RHB Securities Research - 13 Aug 2018