Positive view remains intact above 10,745 pts, keep long positions. The SGX FTSE China A50 dipped 32.50 pts to 11,290 pts yesterday. As a result, a black candle was formed that implied the session was led by the sellers. Nevertheless, as long as no strong downside development is in sight, we make no change to our positive view, especially as the index continues to hover steadily above 10,745 pts – an indication that the bullish bias since the appearance of 3 Jul’s “Bullish Harami” candlestick pattern remains firmly in play. Overall, the bulls remain in control of market setiment.

The daily chart suggests that the bullish bias is resilient above 10,745 pts. In line with the ongoing upside development, we think it best that traders maintain long positions. In order to minimise the downside risk, it is best that they set a cut-loss below the 10,745-pt threshold. Our long call was initially triggered above the 11,570-pt mark on 23 Jul.

We keep the immediate support at 11,150 pts, which was located at the low of 20 Jul. If this level is taken out, our next support is seen at the 10,745-pt critical threshold, or the low of 3 Jul’s “Bullish Harami” pattern. Conversely, the immediate resistance is set at 11,570 pts, ie 29 Jun’s high. This is followed by the next resistance at the 12,000-pt mark, which is near the high of 25 Jul.

Source: RHB Securities Research - 15 Aug 2018