Initiate long positions above the 26,500-pt level. The HSIF formed a white candle yesterday. During the intraday session, it rose to a high of 26,689 pts before ending at 26,653 pts for the day. From a technical perspective, the index has climbed above the 21-day SMA line and hit its 1-week high, implying that the sentiment has turned positive. This can also be viewed as a continuation of the buyers extending the rebound from 5 Dec’s “Bullish Harami” pattern. Yesterday’s closing also triggered our trailing-stop, which we previously recommended investors set at the 26,625-pt threshold.

Based on the daily chart, the immediate support level is now seen at the 26,500-pt round figure. The crucial support is anticipated at 25,949 pts, which was determined from the low of 5 Dec’s “Bullish Harami” pattern. Towards the upside, we are eyeing the immediate resistance level at 27,267 pts, ie the previous high of 26 Nov. Meanwhile, the next resistance will likely be at 27,949 pts, which was obtained from the high of 7 Nov.

Consequently, we advise traders to initiate fresh long positions above the 26,500-pt level. A stop-loss can be set below the 25,949-pt threshold to minimise the downside risk

Source: RHB Securities Research - 12 Dec 2019