Maintain long positions. The HSIF surged higher on strong momentum, up 778 pts to settle at 29,614 pts. Yesterday, it gapped 51 pts higher to open at 28,985 pts. After briefly testing the 28,977-pt day low, strong buying interest lifted the index towards the 29,905-pt day high to close at 29,614 pts. The evening session saw the bulls consolidating near the session’s high of 29,725 pts, ending the day at 29,528 pts. The last 10 sessions’ average trading range (ATR) increased to 236 pts. A projection of 2x ATR from the latest settlement of 29,614 pts should see higher resistance marked at 30,086 pts and supported at 29,141 pts. The immediate resistance is estimated at 1x ATR from 29,614 pts ie 29,850 pts. Since the index is trading away from the 20-day SMA line, we think there will be profit taking or corrections ahead. As long as the trailing stop remains intact, we maintain a 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 and profit protection, the trailing stop is set at 28,800 pts.

The immediate support is marked at 29,141 pts, followed by 19 Jan’s low of 28,800 pts. Towards the upside, the immediate resistance is pegged at 29,850 pts, with the next threshold at 30,086 pts.

Source: RHB Securities Research - 20 Jan 2021