Stay long above the 10,745-pt threshold. The SGX FTSE China A50 inched up 12.50 pts yesterday to 11,232.50 pts. It left a “Doji” candlestick pattern after having oscillated between a low of 11,107.50 pts and high of 11,327.50 pts. This showed that both buyers and sellers were unable to take firm control at the end of the session. The index has managed to stay above the 10,745-pt mark, which implies that the bullish bias in the appearance of 3 Jul’s “Bullish Harami” candlestick pattern is still in play. Overall, our positive view remains intact.

The current technical landscape suggests that opportunities for the buyers remain. As such, it is best that traders stay in long positions. In order to minimise the downside risk, we advise setting a cut-loss below the 10,745-pt threshold. This is in line with our long recommendation on 23 Jul, after the SGX FTSE China A50 breached above the 11,570-pt mark.

We set the immediate support at 11,150 pts, which was the low of 20 Jul. If this level is taken out, the following support is found at the 10,745-pt critical mark, ie the low of 3 Jul’s “Bullish Harami” pattern. On the flip side, our immediate resistance is pegged at 11,570 pts, or 29 Jun’s high. This is followed by the 12,007-pt resistance, which was 25 Jul’s high.

Source: RHB Securities Research - 24 Aug 2018