Stay long, with a stop-loss set below the 24,227-pt support. The E-mini Dow ended lower to form a negative candle yesterday. It slipped 33 pts to close at 25,296 pts, after hovering between a high of 25,385 pts and low of 25,239 pts. Based on the current outlook, the index has been able to stay above the previously-indicated 24,227- pt support for nearly two weeks, which implies that the buyers are still in control of the market. With the 21-day SMA line still pointing upwards, this leads us to believe that the rebound that started off 30 May’s “Bullish Harami” pattern may continue. Overall, we keep our bullish view on the E-mini Dow’s near-term outlook.

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

Hence, we advise traders to stay long, given that we initially recommended initiating long above the 24,860-pt level on 7 Jun. Meanwhile, a stop-loss is preferably set below the 24,227-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 13 Jun 2018