Maintain long positions as the bullish bias is still intact above 10,745 pts. After three weak performances in a row, the SGX FTSE China A50 finally rebounded by 52.50 pts to close at 11,007.50 pts yesterday. Presently, the bullish bias since the appearance of 3 Jul’s “Bullish Harami” candlestick pattern has not been fully negated yet, as the index continues to hover above the 10,745-pt support level. From our technical perspective, the index is merely taking a breather after having increased by over 900 pts in 3-24 Jul. Overall, the bulls are still dominating the market.

Based on the daily chart above, we believe that the near 6-week bullish bias is still in play. From a technical perspective, it best that traders stay in long positions with a cut-loss below the 10,745-pt threshold to minimise trading risks. Recall that we made the long recommendation after the SGX FTSE China A50 climbed above 11,570 pts.

The immediate support is maintained at 10,745 pts, or the low of 3 Jul’s “Bullish Harami” pattern. If this level is taken out, the following support is at the 10,165-pt mark, located at the low of 5 May 2017. Conversely, our immediate resistance is pegged at 11,150 pts, or the low of 20 Jul. Our next resistance is at the 11,570-pt threshold, obtained from 29 Jun’s high.

Source: RHB Securities Research - 17 Aug 2018