Market sentiment remains positive; stay long. The HSIF formed a white candle yesterday. It settled at 25,923 pts, after oscillating between a high of 26,018 pts and low of 25,784 pts. Again, on a technical basis, positive sentiment stays unchanged, as the index has remained above the previously-indicated 25,414-pt support for nearly a month. We believe buyers may continue to control the market, since the HSIF has not negated the bullishness of 21 Nov’s “Hammer” pattern. Overall, we stay positive on the HSIF’s outlook.

Judging from the current outlook, the immediate support level is maintained at 25,414 pts, which was the low of 21 Nov’s “Hammer” pattern. If this level is taken out, the next support is seen at 24,457 pts, ie the previous low of 29 Oct. Towards the upside, we are now eyeing the immediate resistance level at 26,626 pts, situated at the high of 13 Dec. The next resistance is seen at 27,329 pts, defined from the previous high of 4 Dec.

Hence, we advise traders to maintain long positions, given that we initially recommended initiating long above the 25,900-pt level on 5 Nov. In the meantime, a trailing-stop is advisable to set below the 25,414-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 20 Dec 2018