Maintain long positions. The HSIF saw the bears’ profit-taking fully absorbed by the bulls, rising 83 pts to settle at 27,564 pts. On Tuesday, following Monday’s evening session sell-off, the index opened higher at 27,250 pts. The bulls found support at the day low of 27,176 and pushed the HSIF towards the 27,703-pt day high before the day session closed at 27,564 pts. During the evening session, the bulls were paring the losses by the bears, climbing from the 27,463-pt low to the session high of 27,772 pts. It last traded at 27,761 pts. Based on the last 10 trading days, the average trading range (ATR) stood at 210 pts. If we project 2x ATR from the settlement price of 27,564 pts, the HSIF could find the nearest resistance at 27,984 pts. With the RSI moving towards overbought territory – indicating the immediate-term momentum as bullish – we 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 26,932 pts.

The immediate support is marked at 5 Jan’s low – 27,108 pts – and followed by 26,729 pts. On the upside, the immediate resistance is pegged at the 27,984 pts and followed by the next hurdle at 28,193 pts.

Source: RHB Securities Research - 6 Jan 2021