Stay long, with a stop-loss set below the 26,020-pt support. The HSIF’s upside move continued as expected, as another white candle was formed yesterday. During the intraday session, it rose to a high of 27,494 pts before ending at 27,411 pts for the day. From a technical perspective, market sentiment remains positive in the near term, as the index has posted a white candle for the second consecutive day. Meanwhile, the 14-day RSI indicator rose above the 50 neutral point to flash a bullish reading at 50.20 pts, which indicates that the positive sentiment has been enhanced. Overall, the near-term positive outlook should remain intact.

Judging from the outlook, the immediate support level is seen at 26,700 pts, set near the midpoint of 13 Sep’s long white candle. If this level is taken out, look to 26,020 pts – ie the low of 12 Sep’s “Hammer” pattern – as the next support. To the upside, we are eyeing the near-term resistance level at the 28,000-pt psychological spot. This is followed by 28,574 pts, obtained from the previous high of 30 Aug.

Hence, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 26,700-pt level on 14 Sep. A stop-loss can be set below the 26,020-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 20 Sept 2018