Stay long. The E-mini Dow formed a “Doji” candle last Friday. It settled at 25,988 pts, after hovering between a high of 26,049 pts and low of 25,896 pts throughout the day. Last Friday’s “Doji” candle merely indicates that buyers may be taking a breather after recent gains. Given that the index has continued to stay above the rising 21-day SMA line, this implies that the near-term bullish sentiment is still intact. Overall, we believe that the upside swing – which started from 15 Aug’s “Hammer” pattern – may carry on.

Judging from the outlook, the immediate support is seen at 25,607 pts, ie the low of 23 Aug. If this level is taken out decisively, the next support is maintained at 24,955 pts, which was the low of 15 Aug’s “Hammer” pattern. Towards the upside, we are now eyeing the immediate resistance at 26,185 pts, defined from the high of 29 Aug. The next resistance would likely be at the 26,684-pt record high.

Therefore, we advise traders to maintain long positions, given that we previously recommended initiating long above the 24,600-pt level on 11 Jul. A trailing stop is preferably set below the 25,607-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 3 Sept 2018