Maintain long positions. The HSIF ended lower to post a black candle yesterday. It closed at 27,420 pts, off its high of 27,721 pts and low of 27,262 pts. However, it is not surprising that the market is experiencing profit-taking activities following the recent gains. On a technical basis, the bullish sentiment stays intact. This is given that the index does not erase more than 50% of the gains from 11 Feb’s long white candle. Overall, we think the rebound that began from 4 Feb’s white candle is not over yet.

According to the daily chart, the immediate support level is maintained at 27,340 pts, attached near the midpoint of 11 Feb’s long white candle. The next support is anticipated at 26,905 pts, ie the low of 10 Feb. Towards the upside, we are now eyeing the immediate resistance level at 27,721 pts, which was 20 Feb’s high. Meanwhile, the crucial resistance is seen at 28,012 pts, obtained from the high of 17 Feb.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 27,338-pt level on 12 Feb. A trailing-stop set below the 27,340-pt threshold is advisable in order to limit the downside risk.

Source: RHB Securities Research - 21 Feb 2020