Near-term sentiment remains positive; stay long. After rising for three consecutive sessions, the E-mini Dow ended lower to form a black candle last Friday. It declined 111 pts to close at 25,414 pts, after oscillating between a high of 25,572 pts and low of 25,348 pts. However, we believe the near-term upside move is not over yet, as the index continues to hold above the rising 21-day SMA line. Last Friday’s black candle was the result of profittaking activities after the recent gains, in our view. Technically, the bullish sentiment remains intact as long as the E-mini Dow does not close below the 24,912-pt support mentioned previously.

Currently, we anticipate the immediate support level at 24,912 pts, ie the low of 20 Jul. If a breakdown arises, look to 24,600 pts – set near the midpoint of 9 Jul’s long white candle – as the next support. To the upside, we are eyeing the near-term resistance level at 25,813 pts, determined from the previous high of 27 Feb. This is followed by the 26,000-pt psychological mark.

Therefore, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 24,600-pt level on 11 Jul. A trailing-stop can be set below the 24,912-pt threshold in order to secure part of the profits.

Source: RHB Securities Research - 30 Jul 2018