Maintain long positions. Following two consecutive sessions of strong rallies, the HSIF took a breather and consolidated near the 20-day SMA line, retreating 18 pts to settle at 29,212 pts. The index gapped 61 pts higher yesterday to open at 29,234 pts. Profit-taking activities seen during the early morning dragged the HSIF – it fell towards the 29,304-pt day low. During the late afternoon, it pared earlier losses and rebounded higher to close at 29,212 pts. During the night session, the HSIF generally moved sideways, closing at 29,165 pts after touching the 29,031-pt session low. With the 20-day SMA line trending higher, we think this lends support to the index, and it may resume the uptrend mode post consolidations. We may see some minor pullbacks to form a higher low. As long as the stop-loss level stays intact, the uptrend formation remains valid. As such, we maintain a positive trading bias.

We recommend traders shift to long positions. Our long positions were initiated at 29,230 pts, ie the closing level of 2 Feb. To manage risks, the stop loss is raised to 28,434 pts.

The immediate support is revised to 2 Feb’s low of 28,688 pts and followed by 28,434 pts. Towards the upside, the immediate resistance remains at 29,500 pts and followed by the 30,000-pt psychological level.

Source: RHB Securities Research - 4 Feb 2021