Maintain long positions. The HSIF formed a black candle yesterday. It dropped 443 pts to close at 23,175 pts, off its low of 23,096 pts. However, from a technical viewpoint, we believe the buying momentum is not diminished yet, as the index is still holding above the 10-day SMA line. Yesterday’s black candle indicates profit-taking activities after the recent gains, in our view. We expect the market to rise further if the 24,000-pt resistance mentioned previously is taken out decisively in the coming sessions.

As seen in the chart, the immediate support level is seen at 22,800 pts, set near the 10-day SMA line. If this level is taken out, look to 22,300 pts – ie near the midpoint of 24 Mar’s white candle – as the next support. To the upside, we anticipate the immediate resistance level at the 24,000-pt psychological mark. The next resistance is maintained at the 25,000-pt round figure.

Thus, we advise traders to maintain long positions, since we initially recommended initiating long above the 22,300- pt level on 25 Mar. For now, a trailing-stop can be set below the 22,800-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 27 Mar 2020