Stay long, with a stop-loss set below the 24,474-pt support. The HSIF ended higher to form a positive candle yesterday. It settled at 26,036 pts, off its high of 26,166 pts and low of 25,799 pts. From a technical perspective, the bullish sentiment stays intact, as the index continues to hold above the 21-day SMA line. In view of yesterday’s higher close, the HSIF may further extend the rebound from 31 Oct’s “Bullish Engulfing” pattern. Overall, we remain bullish on the HSIF’s outlook.

Based on the daily chart, we now anticipate the immediate support level at 25,323 pts, ie the low of 2 Nov’s long white candle. Meanwhile, the next support is maintained at 24,474 pts, determined from the low of 31 Oct’s “Bullish Engulfing” pattern. Towards the upside, the immediate resistance is now seen at 26,758 pts, obtained from the high of 5 Nov. The next resistance would likely be at 28,037 pts, which was the previous high of 26 Sep.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 25,900-pt level on 5 Nov. In the meantime, a stop-loss is advisable to set below the 24,474-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 7 Nov 2018