Stay long. The HSIF formed a white candle last Friday. It rose 409 pts to settle at 24,359 pts. From a technical perspective, the upside swing is likely to persist, after the index recouped most of the previous two sessions’ losses and marked a higher close above rising 10-day SMA line. This may also further extend the rebound that began with 2 Apr’s “Hammer” pattern. Overall, as we mentioned previously, we expect further upside for the market if the HSIF continues to stay above the 23,700-pt support level in the coming sessions.

Based on the daily chart, the immediate support level is maintained at 23,700 pts – this was determined near the low of 7 Apr’s long white candle. Meanwhile, the next support is seen at the 23,000-pt psychological spot. Towards the upside, we anticipate the immediate resistance level at 24,600 pts, ie near 8 Apr’s high. If a decisive breakout occurs, look to 25,750 pts – near the high of 11 Mar – as the next resistance.

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 set below the 23,700-pt threshold is preferable to lock in part of the gains.

Source: RHB Securities Research - 20 Apr 2020