Maintain long positions. The HSIF ended lower to form a black candle last Friday. It declined to a low of 25,407 pts during the intraday session before ending at 25,465 pts for the day. However, the appearance of last Friday’s black candle indicates that the buyers may be taking a breather following the recent gains. Again, from a technical viewpoint, the bullish sentiment stays intact – as long as the index does not negate the bullishness of the “Bullish Engulfing” pattern that formed on 30-31 Oct. Overall, we keep our positive view on the HSIF’s outlook.

Currently, the immediate support is seen at 25,323 pts, which is situated at the low of 2 Nov’s long white candle. If this level is taken out, the crucial support is maintained at 24,474 pts, or the low of 31 Oct’s “Bullish Engulfing” pattern. To the upside, we are eyeing the immediate resistance at 26,758 pts, ie the high of 5 Nov. Meanwhile, the next resistance will likely be at 28,037 pts, which was defined from the previous high of 26 Sep.

As a result, we advise traders to maintain long positions, since we initially recommended that they initiate long above the 25,900-pt level on 5 Nov. A stop-loss set below the 24,474-pt threshold, in order to limit the downside risk, is preferable.

Source: RHB Securities Research - 12 Nov 2018