Stay long, with a new trailing-stop set below the 25,607-pt level. The E-mini Dow’s upside strength continued as expected, as a long white candle was formed last night. It surged 285 pts to close at 26,077 pts, off the session’s low of 25,805 pts. As the index has successfully taken out the 25,885-pt and 26,000-pt resistances mentioned previously, this can be viewed as buyers extending their buying momentum. Furthermore, yesterday’s close has sent the stock to its highest close in nearly seven months, thereby enhancing the positive sentiment. Overall, we stay bullish on our near-term outlook.

Presently, we anticipate the immediate support level at 25,607 pts, which was the low of 23 Aug. If a decisive breakdown arises, the next support is maintained at 24,955 pts, obtained from the low of 15 Aug’s “Hammer” pattern. On the other hand, we are eyeing the near-term resistance level at 26,215 pts, situated at the high of 2 Feb’s long black candle. This is followed by the 26,684-pt historical high.

To re-cap, on 11 Jul, we initially recommended traders to initiate long positions above the 24,600-pt level. We continue to advise them to stay long for now, while setting a new trailing-stop below the 25,607-pt threshold. This is in order to lock in a larger part of the profits.

Source: RHB Securities Research - 28 Aug 2018