Maintain long positions. The HSIF took a pause from its recent rally, forming a Shooting Star pattern near the resistance last Friday. After testing the day’s high of 29,337 pts, the HSIF’s May futures contract ended Friday’s session at 29,204 pts. During the evening session, mild buying pressure lifted the June futures contract to close at 29,063 pts – forming a footing near the 29,000-pt psychological level. With RSI climbing above the 50% threshold, the index is likely to consolidate sideways before regaining strength to retest the upside resistance. The 20-day and 50-day SMA lines will provide strong support for the current upward movement. As long as the index continues to trade above the 50-day SMA line, the 20-day SMA line will curve upwards and cross above the 50-day SMA line. In anticipation of a bullish crossover of the moving averages, we keep our positive trading bias.

Traders should keep to the long positions initiated at 28,894 pts, or the closing level of 25 May’s day session. For risk management, the initial stop-loss level is kept at 28,400 pts.

The immediate support exists at 28,750 pts, followed by the 28,500-pt round figure. On the other hand, the immediate resistance is pegged at the high of 26 May or 29,272 pts, followed by 29,400 pts.

Source: RHB Securities Research - 31 May 2021