Initiate long positions above the 24,860-pt level. The E-mini Dow formed a long white candle last night. It surged 318 pts to close at 25,140 pts after having oscillated between a high of 25,161 pts and low of 24,812 pts. The index has breached above the previously-indicated 24,840-pt resistance and hit its highest point in more than two months – this implies that near-term sentiment is turning positive. This can be viewed as a continuation of the buyers extending the upside swing from the “Bullish Harami” pattern that formed on 29-30 May. Yesterday’s closing also triggered our trailing-stop, which we previously recommended at the 24,840-pt level.

Currently, we anticipate the immediate support at 24,860 pts – this is set near the highs of 29 May and 4 Jun. The next support is anticipated at 24,227 pts, or the low of 30 May’s “Bullish Harami” pattern. Towards the upside, we are eyeing the near-term resistance marks at 25,510 pts and 25,813 pts, which were obtained from the previous highs of 12 Mar and 27 Feb respectively.

Hence, we advise traders to initiate long positions above the 24,860-pt level. A stop-loss set below the 24,227-pt threshold is preferable in order to minimise the downside risk.

Source: RHB Securities Research - 7 Jun 2018