Maintain long positions. The E-mini Dow ended lower form a black candle last night. It lost 301 pts to close at 24,715 pts, off its high of 25,017 pts and low of 24,569 pts. However, the appearances of 15-19 Jun’s black candles indicate that the buyers may be taking a breather following the recent gains. From a technical perspective, the near-term upside momentum is not diminished yet – as long as the index does not negate the bullishness of 30 May’s “Bullish Harami” pattern. Overall, we think that the near-term rebound – which started from the aforementioned pattern – remains valid.

Judging from the current outlook, the immediate support is seen at 24,227 pts – this was determined from the low of 30 May’s “Bullish Harami” pattern. The next support is likely at 23,467 pts, ie the low of 3 May. To the upside, we are eyeing the immediate resistance at 25,400 pts, which is situated at the high of 11 Jun. If this level is taken out, the next resistance is seen at 25,813 pts – this was the previous high of 27 Feb.

Hence, we advise traders to stay long, given that we initially recommended they initiate long above the 24,860-pt level on 7 Jun. At the same time, a stop-loss can be set below the 24,227-pt threshold to minimise the downside risk.

Source: RHB Securities Research - 20 Jun 2018