Maintain long positions, with a stop loss below the 10,745-pt level. The SGX FTSE China A50 climbed slightly higher by 15 pts last Friday to 11,485 pts and forming a “Doji” candlestick pattern. This was after the index oscillated between a low of 11,372.50 pts and high of 11,552.50 pts. This shows that neither bulls nor bears were able to take firm control at the end of the session. Overall, the bullish bias in 3 Jul’s “Bullish Harami” candlestick pattern continues to exert itself. Based on the current technical landscape, it is likely that the 1-month upside movement may still extend further.

As long as the 10,745-pt support is not taken out, we believe the opportunities are still leaning more towards the buyers. As such, traders are advised to stay in long positions, with a cut-loss pegged below the aforementioned 10,745 pts. For the record, we made the long recommendation on 23 Jul after the SGX FTSE China A50 successfully breached above the 11,570-pt level.

To the downside, our immediate support is maintained at 11,150 pts, or the low of 20 Jul. The following support is pegged at the 10,745-pt critical threshold, which was the low of 3 Jul’s “Bullish Harami” pattern. Conversely, we keep the immediate resistance at 11,570 pts, ie the high of 29 Jun. This is followed by the next resistance at the 12,000-pt mark, which is located at 25 Jul’s high.

Source: RHB Securities Research - 13 Aug 2018