Stay long while setting a new trailing-stop below the 24,600-pt support. The E-mini Dow’s upside move continued as expected, after it ended higher to form a “Doji” candle. It gained 37 pts to close at 25,041 pts, after oscillating between a high of 25,090 pts and low of 24,962 pts. As the index has marked a higher close vis-à-vis the previous sessions since 12 Jul, this can be viewed as the bulls extending their upward momentum. Moreover, as the 14-day RSI indicator recovered to a better reading at 59.89 pts, the bullish sentiment has been enhanced.

As seen in the chart, the immediate support level is seen at 24,600 pts, situated near the midpoint of 9 Jul’s long white candle. If this level is taken out, look to 23,978 pts – ie the low of 28 Jun’s “Bullish Harami” pattern – as the next support. To the upside, the immediate resistance level is anticipated at 25,400 pts, which was the previous high of 11 Jun. The next resistance would likely be at 25,813 pts, determined from the high of 27 Feb.

Thus, we advise traders to maintain long positions, given that we initially recommended initiating long above the 24,600-pt level on 11 Jul. For now, a new trailing-stop can be set below the 24,600-pt threshold as well in order to minimise the risk per trade.

Source: RHB Securities Research - 17 Jul 2018