Bullish sentiment remains intact; stay long. The E-mini Dow ended lower to form a “Doji” candle last night. It closed at 25,985 pts, off the session’s high of 26,080 pts and low of 25,817 pts. Technically speaking, the nearterm positive sentiment is unchanged as this candle can only be viewed as buyers probably taking a pause following the recent surge. We think the upside move will likely continue as long as the index remains above the 25,607-pt support mentioned previously. Given that the E-mini Dow is still trading above the rising 21-day SMA line, this implies that the rebound from 15 Aug’s “Hammer” pattern may carry on.

Based on the daily chart, we anticipate the immediate support at 25,607 pts, which was the low of 23 Aug. The next support is seen at 24,955 pts, ie the low of 15 Aug’s “Hammer” pattern. To the upside, we are eyeing the immediate resistance at 26,185 pts, determined from the high of 29 Aug. Meanwhile, the next resistance is maintained at the 26,684-pt historical high.

Thus, we advise traders to stay long, in line with our initial recommendation to have long positions above the 24,600-pt level on 11 Jul. In the meantime, a trailing stop can be set below the 25,607-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 5 Sept 2018