Maintain long positions. Buying momentum in the HSIF continued as expected, as a white candle was formed last Friday. It rose to a high of 29,181 pts during the intraday session, before ending at 29,077 pts for the day. Technically speaking, the index has climbed above the 21-day SMA line, indicating that the rebound which started in early-January may continue. Moreover, the 14-day RSI indicator recovered to a more positive reading of 57.15 pts, improving the bullish sentiment. Overall, we stay bullish on the HSIF’s outlook.

As seen in the chart, we are eyeing the immediate support at 28,016 pts, which was the low of 11 Mar. The next support would likely be at 27,450 pts, determined from the low of 8 Feb. Towards the upside the immediate resistance is maintained at 29,630 pts, ie the previous high of 20 Mar. If a decisive breakout arises, the next resistance is seen at the 30,000-pt psychological mark.

Therefore, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 29,039-pt level on 20 Mar. Meanwhile, a stop-loss can be set below the 28,016-pt threshold in order to minimise downside risk.

Source: RHB Securities Research - 1 Apr 2019