Stay long. After the market rose for three consecutive sessions, the HSIF ended lower yesterday to form a black candle. It lost 356 pts to close at 24,052 pts. However, we believe the upside move has not diminished yet, as the index is still holding above the rising 10-day SMA line. Yesterday’s black candle indicates profit-taking activities after the recent gains, in our view. Again, we expect the market to trend higher if the immediate 24,600-pt resistance is taken out decisively in the coming sessions.

Based on the daily chart, we maintain the immediate support level at 23,700 pts, which is situated near the low of 7 Apr’s long white candle. The next support is seen at the 23,000-pt psychological spot. Towards the upside, we are eyeing the immediate resistance level at 24,600 pts, ie near the high of 8 Apr. If a breakout arises, the next resistance is anticipated at 25,750 pts – near the high of 11 Mar.

Hence, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 22,300-pt level on 25 Mar. A trailing-stop can be set below the 23,700-pt threshold to lock in part of the gains.

Source: RHB Securities Research - 16 Apr 2020