Stay long while setting a trailing-stop below the 25,414-pt support. After posting two consecutive white candles, the HSIF formed a “Doji” candle yesterday. It settled at 27,271 pts, after hovering between a high of 27,329 pts and low of 27,041 pts throughout the day. However, yesterday’s “Doji” candle should merely indicate that the buyers may be taking a breather following the gains seen lately. With the 21-day SMA line still edging upwards, this leads us to believe that the rebound from 21 Nov’s “Hammer” pattern remains valid. Overall, we stay bullish on the HSIF’s outlook.

As seen in the chart, the immediate support level is seen at 26,435 pts, determined from the low of 3 Dec’s long white candle. The next support is anticipated at 25,414 pts, ie the low of 21 Nov’s “Hammer” pattern. On the other hand, we are eyeing the immediate resistance level at 28,037 pts, which was the high of 26 Sep. Meanwhile, the next resistance is maintained at 28,574 pts, obtained from the high of 30 Aug.

Therefore, 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 trailing-stop can be set below the 25,414-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 5 Dec 2018