Maintain long positions. The bears continued to test the HSIF’s 24,650-pt support level for the second consecutive session with a low of 24,621 pts, before rebounding to settle 388 pts stronger at 25,066 pts. The closing level also placed the index marginally above the 50-day SMA line – a positive price signal. Towards the downside, provided the 24,650-pt support level is not breached at the close, the chances of the HSIF extending its rebound should remain high. We maintain our positive trading bias.

We advise traders to stay in long positions, which we initiated at 25,235 pts, ie the closing level of 12 Aug. For riskmanagement purposes, a stop-loss can be now placed below the 24,650-pt mark.

The immediate support is revised to 24,650 pts – near 12 Aug’s low. This is followed by 24,150 pts, or the low of 7 Aug. Meanwhile, the immediate resistance is now eyed at 25,200 pts, ie a level near the latest two sessions’ highs. The second resistance is pegged at 25,600 pts, which is near the 200-day SMA line.

Source: RHB Securities Research - 24 Aug 2020