Maintain long positions. The HSIF failed in its attempt to cross the immediate resistance yesterday, retracing 102 pts to settle the day session at 26,039 pts. It opened higher at 26,231 pts. Shortly after touching the 26,257-pt day high, it reversed to the 25,898-pt day low before settling at 26,039 pts. In the evening session, profit-taking activity dragged it lower. It was last traded at 25,812 pts. The latest session saw the index fall below the 26,000-pt psychological level, indicating an impending consolidation of the upward movement. If profit-taking continues, the index may correct towards the 50-day SMA line. We expect strong support to be found near the moving average line – upward movement may resume once the consolidation is over. At this stage, we retain our positive trading bias until the trailing-stop is breached.

Traders should hold on to the long positions initiated at 24,809 pts, or the closing level of 7 Oct’s evening session. To mitigate downside risks, the trailing-stop threshold is set at 25,250 pts.

The nearest support is fixed at 25,575 pts (1 Sep’s low), followed by 25,378 pts (19 Oct’s low). The immediate resistance is pegged at 26,190 pts – 13 Sep’s high – followed by 26,478 pts, or 8 Sep’s high.

Source: RHB Securities Research - 27 Oct 2021