Still safe to stay long above 10,745 pts, as the current bullish bias is still exerting itself. Yesterday was a weak session for the SGX FTSE China A50, as it registered a 162.50-pt loss to 11,322.50 pts. A black candle was formed after the index hovered between a low of 11,160 pts and high of 11,487.50 pts. However, this does not negate our near 6-week upside view, given that the SGX FTSE China A50 continues to stay above the 10,745-pt support. As long as this level is not taken out, we believe the current bullish bias has not been fully negated yet. At this juncture, our positive view remains in play.

In the absence of any strong downside development, we believe it is still safe for traders to stay in long positions. In order to minimise the downside risk, they are advised to set a cut-loss below the 10,745-pt threshold. For the record, our long recommendation was initiated on 23 Jul. This was after the SGX FTSE China A50 successfully climbed above the 11,570-pt mark.

Our immediate support is at 11,150 pts, which was the low of 20 Jul. In the event that this level is taken out, the next support is pegged at the 10,745-pt critical mark, ie the low of 3 Jul’s “Bullish Harami” pattern. Meanwhile, the immediate resistance is maintained at 11,570 pts, or the high of 29 Jun. For the next resistance, look to 12,000 pts, which was 25 Jul’s high.

Source: RHB Securities Research - 14 Aug 2018