Bullish sentiment stays intact; stay long. The HSIF formed a white candle yesterday. During the intraday session, it rose to a high of 26,835 pts before ending at 26,759 pts for the day. From a technical viewpoint, we think the buyers may have retained control of the market. This was as yesterday’s white candle has recouped most of the previous session’s losses and marked a higher close above the 21-day SMA line. Meanwhile, yesterday’s higher close can also be viewed as a continuation of the bulls extending the rebound from 10 Oct’s “Hammer” pattern.

Based on the daily chart, the immediate support level is seen at 26,150 pts, situated near the midpoint of 11 Oct’s long white candle. The crucial support is maintained at 25,507 pts, which was the low of 10 Oct’s “Hammer” pattern. To the upside, we are eyeing the immediate resistance level at 27,016 pts, obtained from 18 Oct’s high. Meanwhile, the next resistance would likely be at 27,394 pts, ie the high of 16 Sep.

Therefore, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 26,150-pt level on 16 Oct. A stop-loss can be set below the 25,507-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 29 Oct 2019