Stay long with stop-loss set below the 23,978-pt support. The E-mini Dow formed a black candle last night. It declined 238 pts to close at 24,689 pts, off its high of 24,805 pts and low of 24,611 pts. However, the near-term positive sentiment stays unchanged since this candle can only be viewed as buyers probably taking a breather after the recent surge. Given that the index is still holding above the 21-day SMA line, this indicates that the nearterm upside momentum has not diminished yet. Overall, we believe the rebound that started off 28 Jun’s “Bullish Harami” pattern will likely continue in the coming sessions.

As seen in the chart, we anticipate the immediate support at 24,600 pts, situated near the high of 25 Jun. The next support is maintained at 23,978 pts, ie the low of 28 Jun’s “Bullish Harami” pattern. To the upside, the immediate resistance is now seen at the 25,000-pt psychological mark. If a decisive breakout arises, look to 25,400 pts – which was the previous high of 11 Jun – as the next resistance.

Therefore, we advise traders to maintain long positions, given that we initially recommended initiating long above the 24,600-pt level on 11 Jul. A stop-loss can be set below the 23,978-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 12 Jul 2018