Stay long while setting a trailing-stop below the 27,865-pt support. The upside momentum in the HSIF continued as expected. A long white candle was formed yesterday, which pointed towards a continuation of the upside move. The index surged 564 pts to close at 28,622 pts, off the session’s low of 28,064 pts. As it has recouped the previous day’s losses and marked a higher close above the rising 21-day SMA line, this indicates the buying momentum may have returned. In addition, the 14-day RSI indicator is now rising higher without being overbought, which has enhanced the bullish sentiment. As shown in the chart, we are eyeing the immediate support level at 27,865 pts, or the low of 8 Jan. If this level is taken out, look to 27,380 pts – set near the midpoint of 13 Dec 2019’s long white candle – as the next support. To the upside, the immediate resistance level is seen at 28,947 pts – this was obtained from 3 Jan’s high. Meanwhile, the next resistance is maintained at 29,080 pts, ie the previous high of 4 Jul 2019. Therefore, we advise traders to stay long, given that we initially recommended initiating long above the 26,500-pt level on 12 Dec 2019. A trailing-stop can be set below the 27,865-pt mark to minimise the downside risk.

Source: RHB Securities Research - 10 Jan 2020