Maintain long positions. After testing the two-month high, the HSIF retraced for consolidation, declining 206 pts to settle the day session at 29,144 pts. On Wednesday, it opened flat at 29,312 pts and rose to the day session’s high of 29,398 pts – attempting to cross the 29,400-pt level or the two-month high. However, it then reversed to the session’s low of 29,081 pts before settling at 29,144 pts. As the RSI is trending higher in tandem with the index, we do not see any signs of divergence, and deem the recent pullback as a healthy correction. The upward movement structure – higher highs with higher lows – remains intact. Expect bullish momentum to regain strength after the mild consolidation. As such, we are keeping our positive trading bias.

Traders should stick to the long positions initiated at 28,894 pts, or the closing level of 25 May’s day session. For risk management purposes, the initial stop-loss level is set at 28,550 pts.

The immediate support is placed at the 29,000-pt psychological level, followed by 28,750 pts. On the other hand, the immediate resistance is pegged at 29,400 pts or the high of 1 Jun, followed by 29,650 pts.

Source: RHB Securities Research - 3 Jun 2021