The upside move is likely to persist – stay long. The HSIF formed a white candle last Friday. It closed at 27,951 pts, after oscillating between a high of 27,960 pts and low of 27,450 pts. On a technical basis, market sentiment remains bullish. This is because the index has recouped the previous session’s losses and marked a higher close above the rising 21-day SMA line. This may also further extend the rebound that started with 3 Jan’s “Bullish Harami Cross” pattern. Overall, we remain bullish on the HSIF’s outlook.

As shown in the chart, the immediate support level is seen at 27,325 pts, set near the midpoint of 25 Jan’s long white candle. Meanwhile, the next support is maintained at 26,164 pts, which was the low of 14 Jan. To the upside, we anticipate the immediate resistance level at 28,200 pts, obtained from the high of 1 Feb. If a breakout arises, the next resistance is situated at 28,574 pts, defined from the high of 30 Aug 2018.

Therefore, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 26,000-pt level on 10 Jan. A trailing-stop can be set below the 27,325-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 11 Feb 2019