Stay long. The HSIF ended lower to form a black candle yesterday. It settled at 27,580 pts after hovering between a high of 27,889 pts and low of 27,447 pts. Unsurprisingly, yesterday’s black candle can be viewed as a result of profit-taking activities following the recent gains seen lately. We believe the buyers may continue to control the market as long as the HSIF does not erase the bullishness of 13 Dec’s “Long White Day” candle. Overall, we expect the market to rise further if the previously mentioned immediate 27,949-pt resistance is taken out decisively in the coming sessions.

As seen in the chart, we are eyeing the immediate support level at 26,916 pts, ie the low of 13 Dec’s “Long White Day” candle. Meanwhile, the next support is seen at 26,262 pts, which was the low of 11 Dec. Towards the upside, the immediate resistance level is anticipated at 27,949 pts – defined from 7 Nov’s high. If a breakout arises, look to 28,841 pts – obtained from the previous high of 19 Jul – as the next resistance.

Hence, we advise traders to stay long, in line with our initial recommendation to have long positions above the 26,500-pt level on 12 Dec. A trailing-stop set below the 26,916-pt mark is advisable to secure part of the gains.

Source: RHB Securities Research - 17 Dec 2019