Longer-term market outlook is still considered negative. Today, we analyse the HSIF’s longer-term trend based on its weekly chart. Last week, it ended on a “Doji” candle, indicating that the recent selling momentum may be slowing down. However, we do not anticipate the market trend to turn positive now, given that the index has failed to recover above the major uptrend line drawn in the weekly chart. Recall that in late June, the HSIF marked a decisive breakdown from the major uptrend line – which implies that sellers may possibly be extending the downward momentum in the coming sessions. Overall, judging from the HSIF’s weekly chart, we believe the market correction that started from early February is not over yet.

As seen in the weekly chart, the immediate resistance is seen at 29,113 pts, ie the high of 26 Jul. If this level is taken out, the next resistance is anticipated at the 32,000-pt psychological spot. Towards the downside, we are eyeing the immediate support at 26,020 pts, which was the low of 12 Sep. The next support is situated at 25,110 pts, determined from the previous low of 5 Jul 2017.

Still, based on our analysis of the daily chart, we advise traders to stay long. This is because the market is holding above the 27,294-pt support mentioned in our daily chart. Please refer to our 1 Oct report for more details.

Source: RHB Securities Research - 2 Oct 2018