Initiate long positions above the 24,600-pt level. The E-mini Dow ended higher to form a white candle last night. It rose 153 pts to close at 24,927 pts, after oscillating between a high of 24,937 pts and low of 24,745 pts. As the index has rose above the 21-day SMA line and posted a fourth consecutive white candle, this indicates that market sentiment is turning positive. Yesterday’s white candle can be viewed as a continuation of the bulls extending the rebound from 28 Jun’s “Bullish Harami” pattern. 9 July’s closing has also triggered our trailing-stop, which we had previously recommended that investors set at the 24,496-pt threshold.

Presently, the immediate support level is seen at 24,600 pts, defined near the high of 25 Jun. The crucial support is anticipated at 23,978 pts, which was the low of the “Bullish Harami” pattern that formed on 27-28 Jun. Towards the upside, we are eyeing the immediate resistance level at 25,400 pts, obtained from 11 Jun’s high. The next resistance would likely be at 25,813 pts, ie the previous high of 27 Feb.

Hence, we advise traders to initiate long positions above the 24,600-pt level. In the meantime, a stop-loss can be set below the 23,978-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 11 Jul 2018