Stay long. The HSIF formed a positive candle last Friday. It settled at 25,657 pts, after oscillating between a high of 25,793 pts and low of 25,307 pts. However, the positive sentiment stays unchanged, as the index has remained above the 25,414-pt support mentioned previously for more than a month. Technically, we think the upside move is not diminished yet, since the HSIF has not negated the bullishness of 21 Nov’s “Hammer” pattern. Overall, we remain our positive view on the index’s outlook.

Based on the daily chart, the immediate support level is maintained at 25,414 pts, obtained from the low of 21 Nov’s “Hammer” pattern. Meanwhile, the next support is seen at 24,457 pts, ie the previous low of 29 Oct. To the upside, we maintain the immediate resistance level at 26,626 pts, which was the high of 13 Dec. The next resistance would likely be at 27,329 pts, ie the previous high of 4 Dec.

Hence, we advise traders to maintain long positions, given that we previously 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 - 24 Dec 2018