Near-term positive outlook stays intact; maintain long positions. The HSIF ended higher to form another positive candle yesterday. This was for the third consecutive day, which implies that the near-term positive sentiment is still intact. The HSIF settled at 28,345 pts, after oscillating between a high of 28,474 pts and low of 28,190 pts. From a technical viewpoint, the near-term upside swing is likely to continue, as the index has marked a higher close vis-à-vis the previous sessions since 27 Aug. Furthermore, yesterday’s positive candle can also be viewed as a continuation of the bulls extending the rebound from 16 Aug’s “Hammer” pattern.

As seen in the chart, we anticipate the immediate support level at 27,500 pts, determined near the multiple lows of 2 Aug, 22 Aug and 27 Aug. If this level is taken out, look to 26,642 pts – ie the low of 16 Aug’s “Hammer” pattern – as the next support. To the upside, we maintain the near-term resistance level at 28,659 pts, which was the high of 9 Aug. This is followed by 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 trailing-stop can be set below the 27,500-pt threshold as well in order to limit the downside risk.

Source: RHB Securities Research - 30 Aug 2018