Maintain long positions. The HSIF’s upside strength continued as expected after it ended higher to form a white candle yesterday. It rose to a high of 26,626 pts during the intraday session, before ending at 26,529 pts for the day. As the index has successfully posted a white candle for the second consecutive session, this can be viewed as the bulls extending their upward momentum. Furthermore, as the HSIF climbed above the 21-day SMA line, the bullish sentiment stays intact.

According to the daily chart, we are eyeing the immediate support level at 25,414 pts, which was the low of 21 Nov’s “Hammer” pattern. If this level is taken out, the next support is maintained at 24,457 pts, ie the previous low of 29 Oct. To the upside, the immediate resistance level is seen at 26,758 pts, defined near the highs of 8 Oct and 5 Nov. The next resistance would likely be at 27,329 pts, ie the high of 4 Dec.

Hence, we advise traders to stay long, given that we initially recommended initiating long above the 25,900-pt level on 5 Nov. In the meantime, a trailing-stop can be set below the 25,414-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 14 Dec 2018