Maintain long positions. The HSIF saw mixed sentiment on the first trading day of new year, rising 269 pts to settle at 27,488 pts. On Monday, the index opened flat at 27,225 pts. The bulls tested the low of 27,107 and pushed the index towards the day high of 27,530 pts, before settling at 27,488 pts. However, sentiment turned during the night session. The index opened at 27,498 pts, paring gains to see it retrace to the session low of 27,1008, and was last traded at 27,167 pts. Although the evening candle has engulfed the day candle, we think this is healthy profit-taking or consolidation, as the index recently had a strong rally. With 20 and 50-day SMA lines trending higher, we see the downside support underpinned by strong buying interest. As long as the index trades above the stop-loss, we will maintain our positive trading bias.

We recommend traders maintain long positions. We initiated these at 26,943 pts, or the closing level of 30 Dec 2020. For risk-management, a stop-loss can be placed below 26,709 pts.

The immediate support is marked at 17 Dec’s high of 26,709 pts, followed by 25,920 pts. On the upside, the immediate resistance is pegged at the 27,572-pt round figure, followed by the next hurdle at 27,613 pts.

Source: RHB Securities Research - 5 Jan 2021