Rebound is not over yet; stay long. The HSIF ended on a “Doji” candle yesterday. It settled at 26,740 pts, after hovering between a high of 26,936 pts and low of 26,526 pts throughout the day. Still, the buying momentum is not diminished thus far, as the index continues to stay above the recent low of the 25,880-pt support mentioned previously. Technically, as long as the HSIF does not erase the gains from 4 Feb’s long white candle, there is a possibility that the rebound would keep going.

For now, we are eyeing the immediate support level at 26,500 pts, attached near the midpoint of 4 Feb’s long white candle. The next support level is seen at 26,205 pts and 25,880 pts, ie the low of 4 Feb and 3 Feb respectively. To the upside, the immediate resistance level is anticipated at 26,936 pts, obtained from 5 Feb’s high. The next resistance would likely be at 27,162 pts, defined from 30 Jan’s high.

Hence, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 26,500-pt level on 5 Feb. A stop-loss set below the 25,880-pt level is preferable in order to minimise the downside risk.

Source: RHB Securities Research - 6 Feb 2020