Stay long while setting a stop-loss below the 26,505-pt support. The HSIF formed a positive candle with a long lower shadow yesterday. It closed at 27,153 pts, off the session’s low of 26,702 pts. Technically speaking, the positive momentum has not diminished so far, as the index continues to stay above the recent low of the 26,505-pt support mentioned previously. Yesterday’s long lower shadow implied that there was initial selling momentum during the day before the market pushed it up by the end of the trading session. This indicates that market outlook is still positive.

Based on the daily chart, the immediate support is now seen at 26,505 pts – this was obtained from the recent low of 4 Jun. If a decisive breakdown arises, the next support is anticipated at the 26,000-pt psychological mark. To the upside, we maintain the immediate resistance level at 27,770 pts, which was the high of 12 Jun. The next resistance will likely be at 28,317 pts, ie the previous high of 17 May.

Consequently, we advise traders to stay long, in line with our initial recommendation on 12 Jun to have long positions above the 27,436-pt level. A stop-loss can be set below the 26,505-pt level to minimise the downside risk.

Source: RHB Securities Research - 14 Jun 2019