Maintain long positions. After reaching a low of 27,487 pts, the HSIF rebounded to settle the day session at 28,806 pts – crossing above the 13-week SMA line. However, in the latest evening session, it saw mild profit-taking to close lower at 28,717 pts. From the historical pattern shown, if the index stays above the 13-week SMA line, it tends to climb higher in the weeks ahead. To sustain the bullish stance, the index needs to trade above the 28,550-pt support threshold. In the event it falls below this threshold, the HSIF may see negative sentiment emerge again, and trend lower towards May’s low of 27,487 pts. At this juncture, the index may consolidate – pending bullish momentum gathering pace – and retest the 29,000-pt psychological level. Hence, we keep our positive trading bias.

We recommend traders retain the long positions initiated at 28,894 pts, or the closing level of 25 May’s day session. For risk management, the stop-loss threshold is fixed at 28,550 pts.

The immediate support remains at 28,550 pts, followed by 28,300 pts. Conversely, the immediate resistance is set at the psychological level of 29,000 pts, followed by 29,400 pts, or the high of 1 Jun.

Source: RHB Securities Research - 14 Jun 2021