Stay long. The HSIF formed a white candle yesterday. It closed at 27,565 pts after oscillating between a high of 27,650 pts and low of 27,341 pts. Presently, we think the positive sentiment stays unchanged, as the index has marked a higher close above the rising 10-day SMA line. Technically speaking, as long as the HSIF fails to erase more than 50% of the gains from 11 Feb’s long white candle, this indicates the buyers still have control of the market. Overall, we believe the rebound that started from 4 Feb’s white candle may continue.

As seen in the chart, we are eyeing the immediate support level at 27,340 pts, situated near the midpoint of 11 Feb’s long white candle. If this level is taken out, look to 26,905 pts – which was the low of 10 Feb – as the next support. On the other hand, we anticipate the immediate resistance level at 27,650 pts, ie 19 Feb’s high. The next resistance is maintained at 28,012 pts, defined from 17 Feb’s high.

Hence, we advise traders to maintain long positions, given that we had originally recommended initiating long above the 27,338-pt level on 12 Feb. In the meantime, a trailing-stop can be set below the 27,340-pt threshold to minimise the downside risk.

Source: RHB Securities Research - 20 Feb 2020