Trailing stop triggered; initiate long positions. Premised on strong momentum, the HSIF surpassed the 28,000-pt psychological level to close at 28,012 pts. After the index opened at 27,650 pts, it rose towards the 28,185-pt day high just before noon. It then retraced mildly to settle the day session at 28,012 pts. Profit-taking activities during the evening session brought the HSIF lower – it last traded at 27,882 pts. We will monitor if – in the coming sessions – the index climbs back above the 28,000-pt level. A close below 28,000 pts will be deemed as a false break and may dent sentiment. Conversely, we expect the HSIF to experience selling pressure once it gets nearer towards the 20- day SMA line. Since the traling stop has been breached, we shift over to a positive trading bias.

We closed out the short positions initiated at 28,630 pts – the closing level of 30 Jun’s day session – after the 28,000- pt trailing-stop was triggered. Conversely, we initiate long positions at the closing level of 15 Jul, ie 28,012 pts. For risk-management purposes, the initial stop-loss mark is set at 27,487 pts.

The immediate support remains at 27,487 pts, or 13 May’s low, and then the 27,000-pt whole number. On the upside, the immediate resistance level is pegged at 28,185 pts – 15 Jul’s high – and followed by 28,338 pts, ie 5 Jul’s high.

Source: RHB Securities Research - 16 Jul 2021