Initiate long positions, as the upside resistance has been breached. The HSIF has surged above the 50-day SMA line, breaking past the resistance level near 24,717 pts. The index had a strong opening during the day session, gapping up 215 pts to start at 24,620 pts. It surged 413 pts towards a 25,033-pt high before settling at 25,029 pts. During the night session, however, the HSIF gave up the earlier gains and closed lower at 24,840 pts. With the 20- day SMA line pointing upwards, coupled with the RSI trending above the 50% threshold, these indicate the short-term sentiment as bullish. On the downside, the flattening 50-day SMA line will act as a strong support. Hence, we switch our negative trading bias towards a positive one.

Our previous short positions – initiated at 24,157 pts, or 30 Oct’s closing level – were closed out at 24,717 pts during the latest session. Concurrently, we initiate long positions. For risk-management purposes, a stop-loss is set below the 24,345-pt threshold.

The immediate support is marked at 24,591 pts and followed by the 24,345-pt mark, which was the low of 3 Nov. On the upside, the immediate resistance is eyed at the recent high – 25,154 pts – and followed by 25,202 pts.

Source: RHB Securities Research - 4 Nov 2020