Initiate long positons, as the bulls may be staging a deeper rebound. The HSIF eased 54 pts to settle at 25,074 pts. The index has been showing signs of developing a minor pause over the latest two sessions after having crossed above the 50-day SMA line on 12 Aug. We have not observed any price reversal signals so far, and believe the HSIF’s multi-week retracement phase has been completed with a low of 24,150 pts posted on 7 Aug. It is now likely in the process of extending its rebound, which started from mid-March.

Our previous short positions, which we initiated at 24,920 pts – the closing level of 16 Jul – were closed on 12 Aug at the breakeven threshold. Concurrently, we initiated long positions at 25,235 pts. For risk-management purposes, a stop-loss can be placed at below the 24,500-pt mark.

The immediate support is revised to the 25,000-pt round figure, and followed by 24,650 pts – near 12 Aug’s low. Moving up, the immediate resistance is eyed at 25,500 pts and followed by 25,650 pts, which was a level near the 200-day SMA line.

Source: RHB Securities Research - 17 Aug 2020