Stay long, with a trailing-stop set below the 27,865-pt support. The HSIF formed a black candle yesterday. It rose to a high of 29,222 pts during the intraday session before ending for the day at 28,799 pts. Yet, the emergence of yesterday’s black candle indicates that the buyers may be taking a breather after the recent surge. Given that the index continues to stay above the rising 21-day SMA line, this implies the bullish sentiment remains intact. Overall, we think the rebound that started from 5 Dec 2019’s “Bullish Harami” pattern may carry on.

According to the daily chart, the immediate support level is seen at 27,865 pts, which was the low of 8 Jan. If a breakdown arises, look to 27,380 pts – near the midpoint of 13 Dec 2019’s long white candle – as the next support. On the other hand, we are now eyeing the immediate resistance level at 29,222 pts, which was obtained from the high of 14 Jan. Meanwhile, the next resistance is maintained at the 30,000-pt psychological mark.

Consequently, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 26,500-pt level on 12 Dec 2019. A trailing-stop set below the 27,865-pt mark is advisable to lock in part of the gains.

Source: RHB Securities Research - 15 Jan 2020