Stay long, with a new trailing-stop set below the 26,560-pt level. The HSIF’s upward momentum has continued as expected. Another white candle was formed yesterday, which points to a continuation of the upside move. It rose to a high of 27,361 pt during the intraday session, before ending at 27,240 pts for the day. We note that the index is trading above the rising 21-day SMA line, which suggests that the positive sentiment remains unchanged. Overall, we expect the market to climb higher if the immediate 27,329-pt resistance is taken out decisively in the coming sessions.

As seen in the chart, the immediate support is now seen at 26,560 pts, situated near the midpoint of 15 Jan’s white candle. The crucial support is maintained at 24,876 pts, ie the low of 3 Jan’s “Bullish Harami Cross” pattern. On the other hand, we anticipate the immediate resistance at 27,329 pts, which was the high of 4 Dec 2018. The next resistance would likely be at 28,037 pts, ie the previous high of 26 Sep 2018.

Hence, we advise traders to stay long, in line with our initial recommendation of initiating long above the 26,000-pt level on 10 Jan. For now, a new trailing-stop can be set below the 26,560-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 22 Jan 2019