Maintain long positions. The E-mini Dow formed a black candle last night. It lost 106 pts to close at 25,289 pts, off its high of 25,472 pts and low of 25,247 pts. Still, the appearance of last night’s black candle merely indicates that buyers may be taking a breather after the recent surge. Since the 21-day SMA line is still edging upwards, this indicates that the near-term positive sentiment stays intact. Overall, we believe the rebound that started off 28 Jun’s “Bullish Harami” pattern will likely continue in the coming sessions.

Based on the daily chart, the immediate support is seen at 24,912 pts, which was the low of 20 Jul. Meanwhile, the next support is maintained at 24,600 pts, situated near the midpoint of 9 Jul’s long white candle. On the other hand, the immediate resistance is anticipated at 25,572 pts, ie the high of 27 Jul. If a decisive breakout occurs, the next resistance is seen at 25,813 pts, determined from the previous high of 27 Feb.

Therefore, we advise traders to maintain long positions, given that we previously 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 - 2 Aug 2018