Maintain long positions. Following the long white candle that was formed on 25 Jan, the HSIF ended lower to form a black candle yesterday. It rose to a high of 27,814 pts during the intraday session, before ending at 27,557 pts for the day. Unsurprisingly, yesterday’s black candle should be viewed as a result of profit-taking activities following the recent gains. We believe the bulls may continue to control the market as long as the HSIF does not erase the gains that were created by 18 and 21 Jan’s white candles. Overall, we keep our positive view on the HSIF’s outlook.

As shown in the chart, the immediate support level is maintained at 26,764 pts, ie the low of 18 Jan. If this level is taken out, the next support is seen at the 26,000-pt psychological mark. To the upside, we are eyeing the nearterm resistance level at 28,037 pts, which was the previous high of 26 Sep 2018. This is followed by 28,574 pts, obtained from the high of 30 Aug 2018.

Hence, we advise traders to stay long, following our recommendation of initiating long above the 26,000-pt level on 10 Jan. A trailing-stop can be set below the 26,764-pt level in order to secure part of the gains.

Source: RHB Securities Research - 29 Jan 2019