Initiate long positions above the 26,000-pt level. The HSIF ended higher to form a long white candle yesterday. It surged 612 pts to close at 26,515 pts, off the session’s low of 25,915 pts. From a technical perspective, as the index has breached above the downtrend line drawn in the chart and hit its highest point in more than three weeks, this indicates that market sentiment is turning positive. The latest white candle can be viewed as a continuation of the bulls extending the rebound from 3 Jan’s “Bullish Harami Cross” pattern. Yesterday’s closing has also triggered our stop-loss, which we had previously recommended at the 26,200-pt threshold.

Currently, we are eyeing the immediate support level at the 26,000-pt psychological mark. The crucial support is seen at 24,876 pts, defined from the low of 3 Jan’s “Bullish Harami Cross” pattern. Towards the upside, the immediate resistance level is anticipated at 27,329 pts, ie the high of 4 Dec 2018. Meanwhile, the next resistance is situated at 28,037 pts, obtained from the previous high of 26 Sep 2018.

Hence, we advise traders to initiate long positions above the 26,000-pt level. A stop-loss can be set below the 24,876-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 10 Jan 2019