Stay long provided the 25,087-pt support is not violated at closing. The E-mini Dow formed a black candle with a long lower shadow yesterday. It plunged to a low of 24,955 pts during the intraday session, before ending at 25,187 pts for the day. Still, we maintain our near-term positive sentiment, since yesterday’s candle did not close below the 25,087-pt support mentioned previously. Technically, the long lower shadow indicates that there was an initial selling momentum before the market recouped part of the intraday losses by the end of the trading session – this reflects that buyers still have control over the market.

As seen in the chart, we are eyeing the immediate support at 25,087 pts, ie the low of 2 Aug’s “Hammer” pattern. If a breakdown arises, look to 24,611 pts – which was the previous low of 11 Jul – as the next support. Towards the upside, the immediate resistance is seen at 25,661 pts, determined from the high of 7 Aug. Meanwhile, the next resistance is maintained at 25,813 pts, ie the high of 27 Feb.

Therefore, we advise traders to maintain long positions, following our recommendation to initiate long above the 24,600-pt level on 11 Jul. A trailing-stop can be set below the 25,087-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 16 Aug 2018