Stay long. The HSIF’s upward momentum continued as expected, as a white candle was formed yesterday. It rose to a high of 26,896 pts during the intraday session, before ending at 26,781 pts for the day. From a technical perspective, the index has marked a higher close vis-à-vis the previous sessions since 21 Oct. This indicates that the rebound, which started from 10 Oct’s “Hammer” pattern, may continue. Overall, we keep our positive view on the HSIF’s outlook.

According to the daily chart, the immediate support level is maintained at 26,150 pts, situated near the midpoint of 11 Oct’s long white candle. The crucial support is seen at 25,507 pts, ie the low of 10 Oct’s “Hammer” pattern. On the other hand, we anticipate the immediate resistance level at 27,016 pts, which was the high of 18 Oct. Meanwhile, the next resistance is seen at 27,394 pts, ie 16 Sep’s high.

Therefore, we advise traders to maintain long positions, since we had originally recommended initiating long above the 26,150-pt level on 16 Oct. In the meantime, a stop loss is preferably set below the 25,507-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 23 Oct 2019