Bullish sentiment remains intact; stay long. The HSIF ended lower to form a black candle last Friday. It rose to a high of 28,947 pts during the intraday session, before ending at 28,443 pts for the day. Presently, we maintain our bullish view, as the index has continued to stay above the rising 21-day SMA line. Meanwhile, judging from the current technical landscape, as long as the HSIF does not negate the bullishness of 27 Dec 2019’s upside gap, the upside swing remains in effect. As such, we believe the bulls still have control over the market.

Based on the daily chart, the immediate support level is seen at 27,922 pts – this was determined from the upside gap support of 27 Dec 2019. Meanwhile, the next support is maintained at 27,380 pts, which is situated near the midpoint of 13 Dec 2019’s long white candle. On the other hand, we are now eyeing the immediate resistance level at 28,947 pts, ie the high of 3 Jan. If a breakout arises, look to 29,080 pts – obtained from the previous high of 4 Jul 2019 – as the next resistance.

Consequently, 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 2019. A trailing-stop can be set below the 27,922-pt mark to lock in part of the profits.

Source: RHB Securities Research - 6 Jan 2020