Maintain long positions. The HSIF ended lower to form a negative candle yesterday. It closed at 25,629 pts, after oscillating between a high of 25,864 pts and low of 25,556 pts. Based on the current technical landscape, the selling momentum is considered weak, as the index has not breached below the 24,791-pt support mentioned previously. Again, technically speaking, as long as the bullishness of 15 Aug’s “Hammer” pattern is not negated, we believe that the buyers still have control of the market. Overall, we remain positive on the HSIF’s outlook.

As seen in the chart, we are eyeing the immediate support level at the 25,000-pt round figure. If this level is taken out, look to 24,791 pts – which was the low of 15 Aug’s “Hammer” pattern – as the next support. On the other hand, the immediate resistance level is anticipated at 26,380 pts, ie 20 Aug’s high. The next resistance is seen at 26,880 pts, situated at the high of 5 Aug’s long black candle.

Hence, we advise traders to stay long, given that we previously recommended initiating long above the 26,000-pt level on 21 Aug. In the meantime, a stop-loss is preferably set below the 24,791-pt mark in order to limit the risk per trade.

Source: RHB Securities Research - 29 Aug 2019