Stay long, with a trailing-stop set below the 25,414-pt support. The HSIF ended higher to form a white candle yesterday. It settled at 26,238 pts, off the session’s high of 26,275 pts and low of 25,710 pts. Based on the current technical landscape, the upside momentum is likely to continue in the coming sessions. This was after the index recouped the previous three days’ losses and marked a higher close above the 25,414-pt support mentioned previously. Furthermore, as the 14-day RSI turned higher for a better reading at 50.68 pts as of yesterday, the bullish sentiment has been enhanced. Overall, we stay bullish on the HSIF’s outlook.

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

Therefore, we advise traders to stay long, since we had originally recommended initiating long 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 - 13 Dec 2018