Stay long, with a trailing-stop set below the 27,922-pt support. After posting two black candles in a row, the HSIF formed a white candle yesterday. It closed at 28,382 pts, off the session’s low of 28,100 pts. Presently, the market sentiment remains bullish as the index has stayed above the 27,922-pt support mentioned previously for more than a week. From a technical perspective, as the upside gap that formed on 27 Dec 2019 has not been covered, this shows that the upside swing stays unchanged. Overall, the market trend remains bullish.

As shown in the chart, we are eyeing the immediate support level at 27,922 pts, ie the upside gap support of 27 Dec 2019. If a decisive breakdown occurs, look to 27,380 pts – situated near the midpoint of 13 Dec 2019’s long white candle – as the next support. To the upside, the immediate resistance level is maintained at 28,947 pts, obtained from 3 Jan’s high. Meanwhile, the next resistance is seen at 29,080 pts, ie the previous high of 4 Jul 2019.

Hence, we advise traders to maintain long positions, following our recommendation of initiating long above the 26,500-pt level on 12 Dec 2019. A trailing-stop set below the 27,922-pt threshold is preferable in order to secure part of the gains.

Source: RHB Securities Research - 8 Jan 2020