Stay long. Upward momentum on the HSIF has continued as expected, as a white candle with a long lower shadow was formed last Friday. It dropped to a low of 29,412 pts during the intraday session, before ending at 29,863 pts for the day. The upside move is likely to persist, given that the index has posted a second consecutive white candle. From a technical perspective, the long lower shadow shows that the market was initially sold off, but has managed to bounce back by the end of the session.

This implies a still-positive outlook in coming sessions. According to the daily chart, we anticipate the immediate support level at 29,300 pts, situated near the midpoint of 1 Apr’s long white candle. If a breakdown arises, the next support is seen at 28,410 pts, ie the low of 26 Mar. On the other hand, the immediate resistance level is maintained at 30,336 pts, determined from the high of 15 Apr. Meanwhile, the next resistance is situated at 31,544 pts, obtained from the previous high of 7 Jun 2018.

Hence, we advise traders to stay long, in line with our initial recommendation to have long positions above the 29,039-pt level on 20 Mar. A trailing-stop is advisable to set below the 29,300-pt mark in order to minimise the downside risk.

Source: RHB Securities Research - 6 May 2019