Stay long, with a stop-loss set below the 24,227-pt support. The E-mini Dow formed a positive candle with a long lower shadow last Friday. It declined to a low of 25,076 pts during the intraday session, before ending at 25,307 pts for the day. We note that the index is still trading above the rising 21-day SMA line, which signals that the near-term bullish sentiment remains intact. The long lower shadow implies that there was an initial selling momentum during the day before the market moved up by the end of the trading session – reflecting that the buyers should still have control over the market. Overall, we keep our bullish view on our near-term outlook.

As seen in the chart, we anticipate the immediate support level at 24,860 pts – set near the highs of 29 May and 4 Jun. The next support is maintained at 24,227 pts, determined from the low of 30 May’s “Bullish Harami” pattern. On the other hand, we are eyeing the near-term resistance at 25,510 pts and 25,813 pts, obtained from the previous highs of 12 Mar and 27 Feb respectively.

Hence, we advise traders to stay long, since we had originally recommended initiating long above the 24,860-pt level on 7 Jun. At the same time, a stop-loss is preferably to set below the 24,227-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 11 Jun 2018