Stop-loss triggered; Initiate long positions. The HSIF saw momentum surge yesterday, jumping 348 pts to settle at 26,943 pts. The index, encouraged by recent positive momentum, opened at 26,623 pts. It dipped slightly to the day low of 26,600 pts, before dashing to the day high of 26,966 pts – recording a new high since March’s low. Yesterday also marked the last trading day for the December contract. Based on the price actions, the bears were squeezed out, covering short positions. We think the bullish sentiment will extend into the new Jan 2021 contract. As the Bearish Marubozu was engulfed by the latest candlestick, a new higher high bullish trend has started. As such, we switch to a positive trading bias.

Our previous short positions, initiated at 26,427 pts, were closed out after triggering the stop-loss at 26,810 pts. We initiate long positions at 30 Dec’s closing level. For risk-management, a stop-loss can be placed below 26,500 pts

The immediate support is revised to 30 Dec’s low of 26,609 pts, followed by 25,920 pts. On the upside, the immediate resistance is pegged at the 27,500-pt round figure, followed by the next hurdle at 27,613 pts.

Source: RHB Securities Research - 31 Dec 2020