Stay long while setting a stop-loss below the 24,876-pt support. After rising for five consecutive sessions, the HSIF ended on a negative candle yesterday. It settled at 26,470 pts, after hovering between a high of 26,636 pts and low of 26,228 pts. However, the positive sentiment stays unchanged as this candle can only be viewed as buyers probably taking a breather after the recent gains. Given that the HSIF is trading above the 21-day SMA line and the recent low of 24,876-pt support, this implies that the rebound that started from 3 Jan’s “Bullish Harami Cross” pattern may carry on. Overall, we remain upbeat in our outlook.

Based on the daily chart, the immediate support level is seen at the 26,000-pt psychological spot. The next support is anticipated at 24,876 pts, ie the low of 3 Jan’s “Bullish Harami Cross” pattern. To the upside, we are eyeing the immediate resistance level at 27,329 pts, which was the high of 4 Dec 2018. If a breakout arises, the next resistance is maintained at 28,037 pts, ie the previous high of 26 Sep 2018.

Therefore, we advise traders to stay long, given that we initially recommended initiating long above the 26,000-pt level on 10 Jan. A stop-loss can be set below the 24,876-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 11 Jan 2019