Maintain long positions. The upward movement of the E-mini Dow continued as expected, as a white candle was formed last Friday. It rose 110 pts to close at 25,004 pts, after oscillating between a high of 25,028 pts and low of 24,869 pts. From a technical perspective, we expect the rebound that started from 28 Jun’s “Bullish Harami” pattern to continue. This is because the E-mini Dow has posted a second consecutive white candle and climbed above the 25,000-pt threshold, implying that near-term market sentiment is positive. Overall, we maintain our positive near-term outlook.

Based on the daily chart, we are eyeing the immediate support at 24,600 pts, ie set near the midpoint of 9 Jul’s long white candle. The next support is seen at 23,978 pts, which was the low of 28 Jun’s “Bullish Harami” pattern. Towards the upside, we now anticipate the immediate resistance at 25,400 pts, obtained from the previous high of 11 Jun. Meanwhile, the next resistance is situated at 25,813 pts, ie the high of 27 Feb.

Hence, we advise traders to stay long, in line with our initial recommendation to have long positions above the 24,600-pt level on 11 Jul. In the meantime, a stop-loss is preferably set below the 23,978-pt threshold in order to limit downside risk.

Source: RHB Securities Research - 16 Jul 2018