Maintain long positions. The HSIF formed another black candle last Friday. It closed at 28,780 pts after oscillating between a high of 28,962 pts and low of 28,753 pts. However, the appearance of 4-5 Jul’s black candles indicates that the buyers may be taking a breather following the recent gains. Technically speaking, the bullish sentiment stays intact. This is as long as the index does not break below the 27,989-pt support mentioned previously. Overall, we think the rebound – which began from 13 Jun’s “Hammer” pattern – may persist.

As seen in the chart, we are eyeing the immediate support at 27,989 pts, which was the low of 26 Jun. The next support will likely be at 26,702 pts – this was determined from the low of 13 Jun’s “Hammer” pattern. Towards the upside, we anticipate the immediate resistance at 29,080 pts, ie the high of 4 Jul. Meanwhile, the next resistance is seen at the 30,000-pt psychological mark, which was also set near the high 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 – set below the 27,989-pt threshold – is advisable to secure part of the gains.

Source: RHB Securities Research - 8 Jul 2019