Stay long. The E-mini Dow formed a black candle last night. It dropped 112 pts to close at 25,184 pts, after oscillating between a high of 25,358 pts and low of 25,181 pts. However, we believe the near-term upside move is not over yet, as the index continues to hover above the rising 21-day SMA line. Yesterday’s black candle was the result of profit-taking activities after recent gains, in our view. Technically, the bullish sentiment remains intact as long as the E-mini Dow does not negate the bullishness of 30 May’s “Bullish Harami” pattern. Overall, the nearterm market trend remains bullish.

Based on the daily chart, we are eyeing the immediate support level at 24,860 pts, ie near the highs of 29 May and 4 Jun. If price breaks down, the next support is maintained at 24,227 pts, defined from the low of 30 May’s “Bullish Harami” pattern. Towards the upside, the near-term resistance level is seen at 25,510 pts and 25,813 pts, obtained from the previous highs of 12 Mar and 27 Feb respectively.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 24,860-pt level on 7 Jun. In the meantime, a stop-loss can be set below the 24,227-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 14 Jun 2018