Stay long while setting a trailing-stop below the 28,052-pt support. The HSIF formed another positive candle yesterday. It closed at 28,536 pts, off its high of 28,774 pts and low of 28,441 pts. From a technical viewpoint, market sentiment should remain bullish in the coming sessions, as the index has stayed above the 28,052-pt support mentioned previously for more than a week. Again, we think the bulls may continue to control the market as long as the HSIF does not negate the bullishness of 15 Jul’s “Hammer” pattern. Overall, we keep our bullish view on the index’s outlook.

Presently, we are eyeing the immediate support at 28,052 pts, determined from the low of 15 Jul’s “Hammer” pattern. Meanwhile, the next support would likely be at 26,702 pts, ie the previous low of 13 Jun. To the upside, the immediate resistance is seen at 29,080 pts, which was the high of 4 Jul. If this level is taken out, the next resistance is maintained at the 30,000-pt psychological spot, also set near the high of 6 May’s long black candle.

Thus, 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 28,052-pt level in order to lock in part of the profits.

Source: RHB Securities Research - 25 Jul 2019