Maintain long positions. After posting two white candles in a row, the HSIF formed a “Doji” candle yesterday. It closed at 28,124 pts, after hovering between a high of 28,220 pts and low of 27,916 pts throughout the day. We note that the index is still trading above the rising 21-day SMA line and the previously-indicated 27,325-pt support, which suggests that the bullish sentiment remains unchanged. Overall, we expect the market to rise further if the immediate 28,200-pt resistance is taken out decisively in the coming sessions.

As seen in the chart, we are eyeing the immediate support level at 27,325 pts, situated near the midpoint of 25 Jan’s long white candle. The next support is maintained at 26,164 pts, ie the low of 14 Jan. To the upside, the immediate resistance is anticipated at 28,200 pts, which was the high of 1 Feb. If a breakout arises, look to 28,574 pts – determined from the previous high of 30 Aug 2018 – as the next resistance.

Thus, 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 lock in part of the gains.

Source: RHB Securities Research - 13 Feb 2019