Sentiment remains positive; stay long. The HSIF formed a black candle yesterday. It settled at 28,156 pts, off the session’s high of 28,489 pts. However, we believe the upward momentum is not diminished yet, as the index has not erased more than 50% of the gains from 19 Jun’s long white candle. Yesterday’s black candle indicates profit-taking activities after the recent gains, in our view. We expect the market to rise further if the immediate 28,688-pt resistance is taken out decisively in the coming sessions.

Based on the daily chart, the immediate support level is seen at 27,700 pts, ie near the midpoint of 19 Jun’s long white candle. If this level is taken out, look to 26,702 pts – which was the low of 13 Jun’s “Hammer” pattern – as the next support. Towards the upside, we are now eyeing the immediate resistance level at 28,688 pts, defined from the high of 21 Jun. The next resistance is seen at 29,400 pts, situated near the midpoint of 6 May’s long black candle.

Hence, we advise traders to stay long, in line with our initial recommendation to have long positions above the 27,436-pt level on 12 Jun. A trailing-stop can be set below the 27,700-pt mark in order to lock in part of the gains.

Source: RHB Securities Research - 26 Jun 2019