Maintain long positions while setting a trailing-stop below the 28,410-pt support. The HSIF formed a “Doji” candle yesterday. It closed at 30,159 pts, off its high of 30,205 pts and low of 30,008 pts. From a technical viewpoint, we note that the index is still trading above the rising 21-day SMA line and 28,410-pt support mentioned previously – this suggests the bullish sentiment remains intact. Overall, we expect the market to rise further if the immediate 30,336-pt resistance is taken out decisively in the coming sessions.

Judging from the current outlook, the immediate support is seen at 28,410 pts, which was the previous low of 26 Mar. If this level is taken out, look to 27,450 pts – obtained from the previous low of 8 Feb – as the next support. To the upside, we anticipate the immediate resistance at 30,336 pts, ie the high of 15 Apr. Meanwhile, the next resistance will likely be at 31,544 pts, which was defined from the previous high of 7 Jun 2018.

Hence, we advise traders to stay long, following our recommendation of initiating long above the 29,039-pt level on 20 Mar. At the same time, a trailing-stop can be set below the 28,410-pt threshold to limit the downside risk.

Source: RHB Securities Research - 18 Apr 2019