Maintain long positions. The HSIF’s upside move continued as expected, as a positive candle was formed yesterday. It rose to a high of 26,524 pts during the intraday session, before ending at 26,161 pts for the day. On a technical basis, market sentiment remains positive, as the index has posted a positive candle for the second consecutive day. Meanwhile, the 14-day RSI indicator rose above the 50 neutral point to flash a bullish reading at 53.20 pts, which indicates that the bullish sentiment has been enhanced. Overall, the bullish outlook should remain intact.

As shown in the chart, the immediate support level is seen at 25,323 pts, which was the low of 2 Nov’s long white candle. If this level is taken out, look to 24,474 pts – ie the low of 31 Oct’s “Bullish Engulfing” pattern – as the next support. On the other hand, we are eyeing the immediate resistance level at 26,758 pts, determined from the high of 5 Nov. Meanwhile, the next resistance is maintained at 28,037 pts, ie the previous high of 26 Sep.

Hence, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 25,900-pt level on 5 Nov. A stop-loss can be set below the 24,474-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 8 Nov 2018