Stay long, provided that the 28,052-pt support is not violated at closing. The HSIF formed a white candle yesterday. It settled at 28,201 pts, after oscillating between a high of 28,253 pts and low of 28,062 pts. Yet, we maintain our positive sentiment, as the index failed to close below the 28,052-pt support mentioned previously. As the bullishness of 15 Jul’s “Hammer” pattern has not been negated, the selling momentum is considered weak. Overall, we remain positive on the HSIF’s outlook.

As shown in the chart, we are eyeing the immediate support at 28,052 pts, which was the low of 15 Jul’s “Hammer” pattern. The next support would likely be at 26,702 pts, ie the previous low of 13 Jun. On the other hand, the immediate resistance is seen at 29,080 pts, obtained from 4 Jul’s high. If a breakout arises, the next resistance is maintained at the 30,000-pt psychological spot, also near the high of 6 May’s long black candle.

Hence, we advise traders to maintain long positions, 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 - 31 Jul 2019