Maintain long positions. The E-mini Dow formed another black candle last night. It settled at 25,033 pts, after oscillating between a high of 25,088 pts and low of 24,952 pts. The formation of 19-23 Jul’s black candles illustrate that the market may be taking a breather after the recent gains. Still, we maintain our near-term bullish sentiment, since yesterday’s candle did not break below the 24,600-pt support mentioned two weeks ago. As the index is still trading above the 21-day SMA line, this suggests that the market rebound – which started off 28 Jun’s “Bullish Harami” pattern – may persist.

Based on the daily chart, we are eyeing the immediate support level at 24,600 pts, set near the midpoint of 9 Jul’s long white candle. The next support is maintained at 23,978 pts, which was the low of 28 Jun’s “Bullish Harami” pattern. Towards the upside, the immediate resistance level is seen at 25,400 pts, obtained from the previous high of 11 Jun. If this level is taken out, look to 25,813 pts – defined from the high of 27 Feb – as the next resistance.

We advise traders to stay long, following our recommendation of initiating long above the 24,600-pt level on 11 Jul. A trailing-stop is advisable to be set below the 24,600-pt mark as well, in order to limit the downside risk

Source: RHB Securities Research - 24 Jul 2018