Stay long. The HSIF formed a black candle yesterday. It settled at 28,666 pts, after hovering between a high of 28,913 pts and low of 28,563 pts. Still, the positive sentiment stays unchanged as this candle can only be viewed as buyers probably taking a breather after the recent surge. We think the upside move would likely continue as long as the index fails to erase the gains from 20-22 Feb’s white candles. Given that the HISF is still trading above the rising 21-day SMA line, this implies that the rebound that started from 3 Jan’s “Bullish Harami” pattern may carry on. Overall, we remain upbeat in our outlook.

Based on the daily chart, the immediate support level is maintained at 28,038 pts, ie the low of 20 Feb. If price breaks down, the next support is seen at 27,450 pts, which was the previous low of 8 Feb. To the upside, the immediate resistance level is anticipated at 29,113 pts, determined from the high of 26 Jul 2018. The next resistance would likely be at the 30,000-pt psychological mark.

Thus, 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 28,038-pt level in order to lock in part of the profits.

Source: RHB Securities Research - 1 Mar 2019