Market outlook is considered positive; stay long. The HSIF’s upside strength continued as expected after it ended higher to form a white candle yesterday. It closed at 26,905 pts, off its high of 26,938 pts and low of 26,559 pts. As the index has successfully posted a white candle for the second consecutive day, this can be viewed as the bulls extending their buying momentum. Moreover, as the 14-day RSI indicator recovered to a more positive reading at 60.69 pts, the bullish sentiment has been enhanced.

As seen in the 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. On the other hand, we are eyeing the immediate resistance level at 27,329 pts, which was the high of 4 Dec 2018. The next resistance would likely be at 28,037 pts, determined from the previous high of 26 Sep 2018.

Hence, we advise traders to stay long, given that we initially recommended initiating long above the 26,000-pt level on 10 Jan. For now, a new trailing-stop can be set below the 26,000-pt threshold as well in order to minimise the risk per trade.

Source: RHB Securities Research - 17 Jan 2019