Positive sentiment stays intact; maintain long positions. The HSIF formed a negative candle with a long lower shadow yesterday. It dropped 271 pts to settle at 23,232 pts. However, it is not surprising that buyers may be taking a breather following the recent gains. From a technical perspective, yesterday’s long lower shadow implied that there was initial selling pressure during the day before the market moved up by the end of the trading session. This indicated that the market outlook was still positive.

As seen in the chart, the immediate support level is seen at 22,800 pts, which was obtained near the low of 25 Mar. The next support will likely be at 22,300 pts, ie set near the midpoint of 24 Mar’s white candle. Towards the upside, the immediate resistance is anticipated at the 24,000-pt psychological mark. The next resistance is set at the 25,000-pt round figure.

Consequently, we advise traders to maintain long positions, given that we previously recommended initiating long above the 22,300-pt level on 25 Mar. In the meantime, a trailing-stop can be set below the 22,800-pt threshold to minimise the downside risk.

Source: RHB Securities Research - 31 Mar 2020