Maintain long positions. The HSIF saw profit-taking activity yesterday, declining 88 pts to settle at 27,543 pts. The index opened lower at 27,700 pts, and moved between the day high and low of 27,846 pts and 27,467 pts, before it was last traded at 27,543 pts. In the evening session, sentiment was neutral. It closed at 27,538 after touching the 27,410-pt session low. Based on the latest price action, we saw a bearish Shooting Star formation at the top, indicating that the index may reach an interim high, and is due for a correction. The momentum indicator RSI is rounding, suggesting that the bulls were taking a breather after the recent rally. Nonetheless, the reversal signal needs to be confirmed with another bearish candle, to show there is follow-through action. Until then, 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 purposes, the stop-loss is set at 27,108 pts.

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

Source: RHB Securities Research - 8 Jan 2021