Stay long, with a trailing-stop set below the 24,600-pt support. Upward momentum in the E-mini Dow continued as expected, as a long white candle was formed last night. It rose 181 pts to close at 25,214 pts, off the session’s low of 25,022 pts and high of 25,268 pts. We believe the near-term upside move is likely to continue, as the index has recouped the previous three days’ losses and marked a higher close above the 21-day SMA line. Technically speaking, yesterday’s white candle can be viewed as a continuation of the rebound that started from 28 Jun’s “Bullish Harami” pattern.

As seen in the chart, we anticipate the immediate support level at 24,600 pts, ie near the midpoint of 9 Jul’s long white candle. The crucial support is seen at 23,978 pts, determined from the low of 28 Jun’s “Bullish Harami” pattern. To the upside, we are eyeing the immediate resistance level at 25,400 pts, ie the previous high of 11 Jun. Meanwhile, the next resistance would likely be at 25,813 pts, ie 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. In the meantime, a trailing-stop can be set below the 24,600-pt threshold as well in order to minimise the downside risk.

Source: RHB Securities Research - 25 Jul 2018