Near-term bullish sentiment remains intact; stay long. The upward movement in the E-mini Dow has continued as expected, as another white candle was formed yesterday. It rose 65 pts to close at 25,106 pts, off its high of 25,141 pts and low of 24,971 pts. Market sentiment remains bullish in the near term, as the index has posted a fourth consecutive white candle. On a technical basis, as the E-mini Dow continues to stay above the 21-day SMA line, this suggests that the rebound from 28 Jun’s “Bullish Harami” pattern remains valid. Overall, we keep our bullish view on the index’s near-term outlook.

According to the daily chart, we maintain the immediate support level at 24,600 pts, ie 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, the immediate resistance is anticipated at 25,400 pts, ie the previous high of 11 Jun. If a breakout occurs, look to 25,813 pts – defined from the high of 27 Feb – as the next resistance.

Therefore, we advise traders to stay long, following our recommendation to initiate long above the 24,600-pt level on 11 Jul. A trailing-stop is advisable below the 24,600-pt threshold as well in order to limit downside risk.

Source: RHB Securities Research - 18 Jul 2018