Stay long while setting a trailing-stop below the 26,747-pt level. The HSIF’s upside move continued as expected, as a long white candle was formed yesterday. It surged 642 pts to settle at 27,382 pts. In view of yesterday’s closing, the HSIF has taken out the previously indicated 26,936-pt and 27,162-pt resistances, implying that the bullish sentiment stays intact. In addition, yesterday’s long white candle has also cracked above the 10- day SMA line, enhancing the bullish sentiment. As such, we think the bulls are still in control of the market.

Based on the daily chart, the immediate support level is seen at 27,120 pts, situated near the midpoint of 6 Feb’s long white candle. The next support would likely be at 26,747 pts, obtained from 6 Feb’s low. On the other hand, we anticipate the immediate resistance level at 27,556 pts, ie the downside gap resistance of 29 Jan. Meanwhile, the next resistance is set at the 28,000-pt psychological spot.

Therefore, we advise traders to stay long, given that we initially recommended initiating long above the 26,500-pt level on 5 Feb. At the same time, a trailing-stop can be set below the 27,120-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 7 Feb 2020