Market sentiment remains bullish; stay long. The HSIF formed a black candle last Friday. It dropped to a low of 27,781 pts during the intraday session before ending at 27,867 pts. However, the appearance of last Friday’s black candle should be viewed as a result of profit-taking activities following the recent gains. Technically speaking, the bullish sentiment stays intact – this is as long as the index does not negate the bullishness of the “Bullish Engulfing” pattern that formed on 8 Feb. Overall, we keep our bullish view on the HSIF’s outlook.

As seen in the chart, we anticipate the immediate support at 27,450 pts, ie the low of 8 Feb’s “Bullish Engulfing” pattern. If this level is taken out, look to 26,835 pts – the low of 22 Jan – as the next support. Towards the upside, the immediate resistance is now seen at 28,509 pts – this was obtained from the high of 13 Feb. Meanwhile, the next resistance will likely be at 29,113 pts, ie the previous high of 26 Jul 2018.

Consequently, we advise traders to stay long, 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 27,450-pt level to lock in part of the gains.

Source: RHB Securities Research - 18 Feb 2019