Initiate long positions above the 27,436-pt level. The HSIF formed another white candle yesterday. It rose to a high of 27,756 pts during the intraday session before ending at 27,688 pts for the day. On a technical basis, as the index has posted a fourth consecutive positive candle and hit its 3-week high, this indicates that market sentiment is turning positive. We also note that the HSIF climbed above the 21-day SMA line, which suggests the positive sentiment has been enhanced. Meanwhile, 10 Jun’s closing also triggered our previous trailing-stop recommendation at the 27,450-pt mark – which has locked in part of the profit – since we initially advised traders to initiate short below the 29,400-pt level on 7 May.

Presently, the immediate support is seen at 27,436 pts, ie 11 Jun’s low. The next support should likely be at 26,505 pts – this was the recent low of 4 Jun. To the upside, we anticipate the near-term resistance at 28,317 pts, which was obtained from 17 May’s high. This is followed by 29,086 pts, ie defined from the high of 8 May.

Consequently, we advise traders to initiate fresh long positions above the 27,436-pt level. A stop-loss can be set below the 26,505-pt threshold to minimise the downside risk.

Source: RHB Securities Research - 12 Jun 2019