Stay long. The E-mini Dow formed another black candle last night. It declined 129 pts to close at 25,285 pts, off its high of 25,475 pts and low of 25,264 pts. Still, yesterday’s black candle can be interpreted as profit-taking activities following recent gains. From a technical viewpoint, the 21-day SMA line is still edging upwards, suggesting that the near-term upward momentum is not over yet. Overall, we think that the market sentiment will stay bullish, as long as the previously-indicated 24,912-pt support is not violated at the closing.

As seen in the chart, the immediate support is seen at 24,912 pts, which was the low of 20 Jul. The next support is anticipated at 24,600 pts, situated near the midpoint of 9 Jul’s long white candle. Towards the upside, the immediate resistance is now set at 25,572 pts, obtained from the high of 27 Jul. If a breakout arises, look to 25,813 pts – ie the previous high of 27 Feb – as the next resistance.

Hence, 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 24,912-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 31 Jul 2018