Market rebound is not diminished yet; maintain long positions. The HSIF formed a negative candle with a long lower shadow yesterday. It dropped to a low of 25,156 pts during the intraday session, before ending at 25,661 pts for the day. However, it is not surprising that buyers may be taking a breather following the recent gains. From a technical perspective, yesterday’s long lower shadow implied that there was initial selling pressure during the day before the market moved up by the end of the trading session. This indicated that the market outlook was still positive.

For now, we anticipate the near-term support level at the 25,000-pt round figure. This is followed by 24,791 pts, obtained from the low of 15 Aug’s “Hammer” pattern. Towards the upside, we are eyeing the immediate resistance level at 26,380 pts, ie the high of 20 Aug. If this level is taken out, look to 26,880 pts – situated at the high of 5 Aug’s long black candle – as the next resistance.

Hence, we advise traders to maintain long positions, following our recommendation of initiating long above the 26,000-pt level on 21 Aug. A stop-loss can be set below the 24,791-pt mark in order to limit the risk per trade.

Source: RHB Securities Research - 27 Aug 2019