Stay long while setting a stop loss below the 25,507-pt support. The upward momentum of the HSIF has continued as expected, as a white candle was formed yesterday. During the intraday session, it rose to a high of 26,988 pts before ending at 26,885 pts for the day. Market sentiment remains bullish, as the aforementioned white candle was the second one recorded in two consecutive days. This movement may also further extend the rebound that began with 10 Oct’s “Hammer” pattern. Overall, the bullish outlook should remain unchanged.

As seen in the chart, we are eyeing the immediate support level at 26,150 pts, situated near the midpoint of 11 Oct’s long white candle. Meanwhile, the next support will likely be at 25,507 pts, ie the low of 10 Oct’s “Hammer” pattern. Towards the upside, the immediate resistance level is seen at the 27,000-pt psychological spot. The next resistance is anticipated at 27,394 pts, obtained from 16 Sep’s high.

Hence, we advise traders to maintain long positions, following our recommendation of initiating long above the 26,150-pt level on 16 Oct. A stop loss can be set below the 25,507-pt mark in order to minimise the downside risk.

Source: RHB Securities Research - 18 Oct 2019