Stay long while setting a trailing-stop below the 26,457-pt support. The HSIF ended higher to form a white candle yesterday. It rose to a high of 27,042 pts during the intraday session, before ending at 26,984 pts for the day. From a technical perspective, we expect the rebound that started from 10 Oct’s “Hammer” pattern to likely continue. This is because the HSIF has stayed above the 26,457-pt support mentioned previously and the rising 21-day SMA line, implying that the market sentiment is bullish. Overall, we remain upbeat on the HSIF’s outlook.

As shown in the chart, the immediate support level is seen at 26,457 pts, ie the low of 23 Oct. If a breakdown arises, look to 25,507 pts – determined from the low of 10 Oct’s “Hammer” pattern – as the next support. Towards the upside, we are eyeing the immediate resistance level at 27,077 pts, ie the high of 29 Oct. The next resistance will likely be at 27,394 pts, which was the high of 16 Sep.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 26,150-pt level on 16 Oct. A trailing-stop is advisable to set below the 26,457-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 1 Nov 2019