Stay long provided that the 22,800-pt support is not violated at the closing. The HSIF formed a black candle yesterday. It lost 790 pts to close at 22,930 pts. As seen in the chart, the index has failed to close below the 22,800- pt support mentioned previously, which implies that the bulls are still in control of the market. Technically speaking, the positive sentiment would remain intact as long as the index does not erase the gains from 25 Mar’s white candle. Overall, we keep our positive view on the index’s outlook.

As shown in the chart, we maintain the immediate support level at 22,800 pts, set near the low of 25 Mar’s white candle. If a breakdown arises, the next support is seen at 22,300 pts, ie near the midpoint of 24 Mar’s white candle. Towards the upside, we anticipate the near-term resistance level at the 24,000-pt psychological mark. This is followed by the 25,000-pt round figure.

Thus, we advise traders to maintain long positions, given that we initially recommended initiating long above the 22,300-pt level on 25 Mar. A trailing-stop set below the 22,800-pt threshold is advisable in order to minimise the downside risk.

Source: RHB Securities Research - 2 Apr 2020