Sentiment stays positive; maintain long positions. The HSIF formed a positive candle with a long lower shadow yesterday. It settled at 26,231 pts, off the session’s low of 26,014 pts. However, it is not surprising that buyers may be taking a breather following the recent rebound. On a technical basis, yesterday’s long lower shadow implied that there was initial selling momentum during the day before the market moved up by the end of the trading session. This implied that the market outlook was still positive.

As seen in the chart, the near-term support level is maintained at the 26,000-pt psychological mark. This is followed by 24,791 pts, which was the low of 15 Aug’s “Hammer” pattern. Towards the upside, the immediate resistance level is seen at 26,880 pts, ie the high of 5 Aug. Meanwhile, the next resistance is anticipated at the 28,000-pt round figure.

Hence, we advise traders to maintain long positions, following our recommendation of initiating long above the 26,000-pt level on 21 Aug. In the meantime, a stop-loss can be set below the 24,791-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 22 Aug 2019