Near-term bullish outlook stays unchanged; maintain long positions. The E-mini Dow formed a “Doji” candle last night. It closed at 26,085 pts, after hovering between a high of 26,156 pts and low of 26,044 pts throughout the day. Yet, the appearance of yesterday’s “Doji” candle merely indicates that the buyers may be taking a pause after the recent surge. 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.

As seen in the chart, the immediate support level is seen at 25,607 pts, ie the low of 23 Aug. The next support is seen at 24,955 pts, ie the low of 15 Aug’s “Hammer” pattern. Towards the upside, the near-term resistance level is maintained at 26,215 pts, determined from the high of 2 Feb’s long black candle. This is followed by the 26,684-pt record high.

Thus, we advise traders to maintain long positions, given that we initially recommended initiating long above the 24,600-pt level on 11 Jul. At the same time, a trailing-stop can be set below the 25,607-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 29 Aug 2018