Maintain long positions. Buying momentum in the HSIF continued as expected, as a long white candle was formed yesterday. This points to a continuation of the upside move. It surged 657 pts to close at 28,252 pts, off its low of 27,520 pts and high of 28,273 pts. From a technical perspective, yesterday’s long white candle has recouped the previous two days’ losses – and also climbed above the 21-day SMA line. This indicates that buying momentum has been extended. Overall, we believe the rebound that started off 16 Aug’s “Hammer” pattern may continue.

Based on the daily chart, we maintain the immediate support at 27,500 pts, determined near the multiple lows of 2 Aug, 22 Aug and 27 Aug. Meanwhile, the crucial support is seen at 26,642 pts, ie the low of 16 Aug’s “Hammer” pattern. Towards the upside, we anticipate the immediate resistance at 28,659 pts, which was the high of 9 Aug. The next resistance is seen at 29,113 pts, obtained from the previous high of 26 Jul.

Therefore, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 27,500-pt level on 23 Aug. A stop-loss can be set below the 26,642-pt threshold in order to limit downside risk.

Source: RHB Securities Research - 28 Aug 2018