Bullish sentiment remains intact, stay long. The HSIF formed a black candle yesterday. It settled at 26,765 pts, off its high of 27,296 pts and low of 26,724 pts. However, from a technical viewpoint, yesterday’s black candle should be viewed as a result of profit-taking activities post recent gains. We believe market sentiment will remain bullish in the coming sessions, given that the index is still trading above the rising 21-day SMA line. Overall, we keep our bullish view on the HSIF’s outlook.

Based on the daily chart, we are eyeing the immediate support at 26,435 pts, ie the low of 3 Dec’s long white candle. If price breaks down, look to 25,414 pts – which was the low of 21 Nov’s “Hammer” pattern – as the next support. To the upside, we anticipate the immediate resistance at 28,037 pts – this was obtained from the high of 26 Sep. The next resistance is likely to be at 28,574 pts, situated at the high of 30 Aug.

As a result, 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 trailing-stop set below the 25,414-pt threshold is advisable to limit the downside risk.

Source: RHB Securities Research - 6 Dec 2018