Stay long, with a trailing-stop set below the 23,700-pt support. The HSIF formed a negative candle yesterday. It settled at 24,280 pts, after hovering between a high of 24,474 pts and low of 24,176 pts throughout the session. However, the market sentiment remains positive, as we view yesterday’s negative candle as a pullback after the previous day’s gains. Since the index is still holding above the rising 10-day SMA line, this indicates that the upside move is not over yet. Overall, we believe the upside swing that started off 2 Apr’s “Hammer” pattern would likely persist in the coming sessions.

As seen in the chart, we anticipate the immediate support level at 23,700 pts, ie near the low of 7 Apr’s long white candle. The next support would likely be at the 23,000-pt psychological mark. On the other hand, the immediate resistance level is seen at 24,600 pts, which is near 8 Apr’s high. Meanwhile, the next resistance is situated at 25,750 pts, determined near 11 Mar’s high.

Thus, we advise traders to stay long, following our recommendation of initiating long above the 22,300-pt level on 25 Mar. In the meantime, a trailing-stop can be set below the 23,700-pt mark in order to secure part of the profits.

Source: RHB Securities Research - 21 Apr 2020