Maintain long positions. The HSIF has been displaying the risk-on sentiment, touching the 27,000-pt psychological threshold, before settling at 26,748 pts. Based on the weekly chart, the momentum turned positive when it crossed the 50-week SMA line. This showed that, in the bigger picture, the 50-week SMA line will provide a strong support for the long-term trend. The RSI momentum indicator is also at a confluence with the bullish trend that it is moving upwards, above the 50% threshold. We do not rule out a possibility of an immediate-term correction, and we could also see a rebound, as long as the 50-week SMA line and RSI are both pointing north. These positive expectations will stay valid, provided the support level remains intact. With no sight of negative reversal patterns yet, coupled with the ‘higher lows’ weekly pattern, we stick to our positive trading bias.

We recommend traders maintain long positions. We initiated these at 26,177 pts, or the closing level of 13 Nov. For risk-management purposes and profit protection, a trailing stop can be placed below 26,353 pts.

Immediate support is adjusted to 26,500 pts, followed by 25,920 pts. On the upside, immediate resistance is pegged at the 27,000-pt round figure, followed by 27,250.

Source: RHB Securities Research - 27 Nov 2020