Initiate long positions above the 26,450-pt level. The HSIF ended higher to form a long white candle yesterday. It surged 551 pts to settle at 26,703 pts. From a technical perspective, the index has climbed above the 10-day SMA line and hit its 1-week high, implying that the sentiment has turned positive. This can also be viewed as a continuation of the buyers extending the rebound from 2 Mar’s “Hammer” pattern. Yesterday’s close also triggered our trailing-stop, which we previously recommended investors set at the 26,500-pt threshold.

As seen in the chart, we are eyeing the immediate support level at 26,450 pts – this is situated near the midpoint of 5 Mar’s long white candle. The next support is seen at 25,971 pts, ie the low of 4 Mar. On the other hand, the immediate resistance level is anticipated at the 27,000-pt psychological mark. The next resistance will likely be at 27,335 pts, ie the high of 24 Feb.

Hence, we advise traders to initiate long positions above the 26,450-pt level. A stop-loss can be set below the 25,971-pt threshold to minimise the downside risk.

Source: RHB Securities Research - 6 Mar 2020