Stay long, with a new trailing-stop set below the 27,325-pt support. The HSIF ended lower to form a black candle last Friday. It dropped to a low of 27,743 pts during the intraday session, before ending at 27,862 pts for the day. Still, on a technical basis, last Friday’s black candle can be viewed as a weak pullback after recent gains. We think the bulls may continue to control the market, given that the index did not erase more than 50% of gains from 25 Jan’s long white candle. Overall, we stay bullish on the HSIF’s outlook.

Based on the daily chart, we now anticipate the immediate support at 27,325 pts, situated near the midpoint of 25 Jan’s long white candle. The next support is seen at 26,164 pts, determined from the low of 14 Jan. On the other hand, we are eyeing the immediate resistance at 28,200 pts, which was the previous high of 1 Feb. Meanwhile, the next resistance is maintained at 28,574 pts, ie the high of 30 Aug 2018.

To recap, on 10 Jan, we initially recommended traders to initiate long positions above the 26,000-pt level. We continue to advise staying long for now, while setting a new trailing-stop below the 27,325-pt threshold. This is in order to lock in a larger part of the profits.

Source: RHB Securities Research - 4 Feb 2019