Maintain long positions. The E-mini Dow formed a black candle last night. It declined 46 pts to close at 25,671 pts, off its high of 25,767 pts and low of 25,607 pts. Still, on a technical basis, the formation of yesterday’s black candle can be viewed as profit-taking activities following recent gains over the past one week. Again, we think the near-term upside move is not diminished yet, given that the E-mini Dow is still trading above the rising 21-day SMA line. Overall, we expect the market to rise further if the immediate 25,885-pt resistance mentioned previously is taken out decisively in the coming sessions.

As seen in the chart, we are eyeing the immediate support at 24,955 pts, which was the low of 15 Aug’s “Hammer” pattern. If this level is taken out decisively, look to 24,611 pts – determined from the previous low of 11 Jul – as the next support. Towards the upside, the immediate resistance is seen at 25,885 pts, ie the high of 21 Aug. The next resistance is anticipated at the 26,000-pt psychological spot.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 24,600-pt level on 11 Jul. A trailing-stop can be set below the 24,955-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 24 Aug 2018