Maintain long positions. The HSIF saw a session of two halves last Friday, where the day session closed marginally above the 28,000-pt psychological level at 28,020 pts while the evening session retraced below the psychological level to close weaker at 27,780 pts. As mentioned in our previous note, the aforementioned level is crucial for the index, as it acts as a confidence mark for the bulls. Trading below this psychological level may suggest that the recent technical rebound is near to exhaustion. For the coming sessions, we will monitor the reaction at the immediate support level of 27,487 pts. As long as the stop-loss threshold stays intact, we deem the pullbacks as mild consolidations. Meanwhile, a bounce above the psychological level will see the HSIF garner strong buying interest once more. As of now, we stick with our positive trading bias.

We recommend traders shift to long positions, which were initiated at 28,012 pts, or the closing level of 15 Jul. To manage trading risks, the initial stop-loss threshold is set at 27,487 pts, ie the resistance-turned-support level.

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

Source: RHB Securities Research - 19 Jul 2021