Stay long while setting a trailing-stop below the 22,800-pt support. The HSIF ended higher yesterday to form a white candle, rising by 706 pts to close at 23,720 pts – this was off its high of 23,750 pts. On a technical basis, the upside move is likely to continue, after the index recouped the previous session’s losses and marked a higher close above the 10-day SMA line. This may also further extend the rebound, which started with 24 Mar’s white candle. Overall, we expect the market to rise further if the immediate 24,000-pt resistance mentioned previously is taken out decisively in the coming sessions.

According to the daily chart, we are eyeing the immediate support level at 22,800 pts, ie near the low of 25 Mar’s white candle. If this level is taken out, look to 22,300 pts – situated near the midpoint of 24 Mar’s white candle – as the next support. On the other hand, we are eyeing the near-term resistance level at the 24,000-pt psychological spot. This is followed by the 25,000-pt round figure.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 22,300-pt level on 25 Mar. A trailing-stop can be set below the 22,800-pt threshold to limit the downside risk.

Source: RHB Securities Research - 1 Apr 2020