Stay long while setting a trailing-stop below the 25,087-pt support. The E-mini Dow formed a black candle last Friday. It declined 162 pts to close at 25,331 pts, after oscillating between a high of 25,490 pts and low of 25,215 pts. Based on the current technical landscape, the near-term positive sentiment stays unchanged as this candle can only be viewed as buyers probably taking a breather after the recent rise. Since the 21-day SMA line is still pointing upwards, this indicates that the near-term upward momentum is not over yet. Overall, we maintain our bullish view on the E-mini Dow’s near-term outlook.

Based on the daily chart, we anticipate the immediate support at 25,087 pts, defined from the low of 2 Aug’s “Hammer” pattern. If this level is taken out decisively, look to 24,611 pts – which was the low of 11 Jul – as the next support. To the upside, the immediate resistance is now seen at 25,661 pts, ie the high of 7 Aug. The next resistance is anticipated at 25,813 pts, ie the previous high of 27 Feb.

Therefore, we advise traders to stay long, in line with our initial recommendation to have long positions above the 24,600-pt level on 11 Jul. A trailing-stop is advisable below the 25,087-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 13 Aug 2018