Stay long, with a trailing-stop set below the 27,989-pt support. The HSIF ended higher to form a white candle yesterday. It settled at 28,622 pts after oscillating between a high of 28,661 pts and low of 28,474 pts. Based on the current technical landscape, the bullish sentiment stays intact, as the index has remained above the previously-indicated 27,989-pt support for nearly three weeks. We think the buyers may continue to control the market, since the HSIF has marked a higher close above the rising 21-day SMA line. Overall, we keep our bullish view on the index’s outlook.

As seen in the chart, we are eyeing the immediate support at 27,989 pts – determined from 26 Jun’s low. Meanwhile, the next support is anticipated at 26,702 pts, ie the low of 13 Jun’s “Hammer” pattern. To the upside, the immediate resistance is seen at 29,080 pts, or the high of 4 Jul. If this level is taken out, the next resistance is maintained at the 30,000-pt round figure, which is also set near the high of 6 May’s long black candle.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 27,436-pt level on 12 Jun. A trailing-stop can be set below the 27,989-pt threshold to lock in part of the gains.

Source: RHB Securities Research - 17 Jul 2019