Stay long. The HSIF formed a black candle yesterday. It rose to a high of 30,336 pts during the intraday session, before ending at 29,825 pts for the day. Still, we believe the upside move is not diminished yet, as the index continues to hover above the rising 21-day SMA line. Yesterday’s black candle was the result of profit-taking activities after the recent surge, in our view. Technically, the bullish sentiment remains intact as long as the HSIF does not close below the 28,410-pt support mentioned previously. Overall the market trend remains bullish.

As shown in the chart, the immediate support level is seen at 28,410 pts, determined from the previous low of 26 Mar. If this level is taken out, look to 27,450 pts – which was the low of 8 Feb – as the next support. Towards the upside, we maintain the immediate resistance level at 30,295 pts, ie the high of 9 Apr. Meanwhile, the next resistance would likely be at 31,544 pts, obtained from the previous high of 7 Jun 2018.

To re-cap, on 20 Mar, we initially recommended traders to initiate long positions above the 29,039-pt level. We continue to advise them to stay long for now, while setting a trailing-stop below the 28,410-pt threshold. This is in order to limit the risk per trade.

Source: RHB Securities Research - 16 Apr 2019