Stay long, with a stop-loss set below the 28,016-pt support. After posting four white candles in a row, the HSIF ended lower to form a black candle yesterday. It closed at 29,326 pts, after oscillating between a high of 29,630 pts and low of 29,261 pts for the day. However, it is not surprising that the market is experiencing profittaking activities after the recent gains. On a technical basis, the bullish sentiment stays intact. This is as the index is still trading above the rising 21-day SMA line. Overall, we believe the rebound that began with the recent low on 11 Mar is not over yet.

As seen in the chart, the immediate support is seen at 29,039 pts, ie the low of 18 Mar’s long white candle. If this level is taken out, look to 28,016 pts – which was the previous low of 11 Mar – as the next support. On the other hand, we are eyeing the near-term resistance at the 30,000-pt psychological spot. This is followed by 31,544 pts, determined from the previous high of 7 Jun 2018.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 29,039-pt level on 20 Mar. A stop-loss can be set below the 28,016-pt threshold in order to limit downside risk.

Source: RHB Securities Research - 21 Mar 2019