Market sentiment remains positive; stay long. The HSIF ended lower to form a black candle last Friday. It closed at 26,040 pts, after oscillating between a high of 26,515 pts and low of 26,020 pts. Technically speaking, last Friday’s black candle can be viewed as a result of profit-taking activities following the recent gains. We believe that the buyers may continue to control the market as long as the HSIF does not negate the bullishness of 21 Nov’s “Hammer” pattern. Overall, we keep our bullish view on the HSIF’s outlook.

As seen in the chart, the immediate support level is seen at 25,414 pts, obtained from the low of 21 Nov’s “Hammer” pattern. The next support is anticipated 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, ie near the highs of 8 Oct and 5 Nov. Meanwhile, the next resistance is seen at 27,329 pts, determined from the high of 4 Dec.

Thus, we advise traders to maintain long positions, since we had originally recommended initiating long above the 25,900-pt level on 5 Nov. A trailing-stop is preferably set below the 25,414-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 17 Dec 2018