Initiate long positions above the 26,000-pt level. The HSIF ended higher to form a “Doji” candle yesterday. It rose 24 pts to close at 26,215 pts. Technically speaking, the index has marked a higher close vis-à-vis the previous sessions since 15 Aug and closed above the previously-indicated 26,206-pt resistance. This indicates that market sentiment is turning positive. This can also be viewed as a continuation of the bulls extending the rebound from 15 Aug’s “Hammer” pattern. Yesterday’s closing also triggered our previous trailing-stop recommendation at the 26,206 threshold – which has locked in part of the profit. Note we initially advised traders to initiate short below the 28,109-pt level on 1 Aug.

Currently, we anticipate the near-term support level at the 26,000-pt psychological spot. This is followed by 24,791 pts, ie the low of 15 Aug’s “Hammer” pattern. On the other hand, we are eyeing the immediate resistance level at 26,880 pts, defined from 5 Aug’s high. The next resistance is seen at the 28,000-pt round figure.

Thus, we advise traders to initiate fresh long positions above the 26,000-pt level. A stop-loss can be set below the 24,791-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 21 Aug 2019