Stay long while setting a trailing-stop below the 25,414-pt support. The HSIF formed another black candle yesterday. It closed at 25,713 pts, after oscillating between a high of 26,369 pts and low of 25,551 pts. However, the buying momentum is not diminished thus far, as the index continues to stay above the 25,414-pt support mentioned previously. On a technical basis, as long as the HSIF does not negate the bullishness of the “Hammer” pattern created on 21 Nov, there is a possibility that the rebound would keep going.

As seen in the chart, the immediate support level is seen at 25,414 pts, ie the low of 21 Nov’s “Hammer” pattern. The next support is anticipated at 24,457 pts, obtained from the previous low of 29 Oct. On the other hand, we are eyeing the immediate resistance level at 26,758 pts, near the highs of 8 Oct and 5 Nov. Meanwhile, the next resistance is situated at 27,329 pts, which was the high of 4 Dec.

Therefore, we advise traders to stay long, 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 - 11 Dec 2018