Maintain long positions. The E-mini Dow formed another “Doji” candle last night. It slipped 12 pts to settle at 25,973 pts, after oscillating between a high of 26,026 pts and low of 25,841 pts throughout the session. Given that the index has managed to stay above the previously indicated 25,607-pt support, it suggests that the near-term upside move is not diminished yet. Moreover, the 21-day SMA line is still edging upwards, implying that positive sentiment remains intact. Overall, we expect the market to rise further if the immediate 26,185-pt resistance mentioned previously is taken out decisively in the coming sessions.

Judging from the current outlook, we are eyeing the immediate support at 25,607 pts, ie the low of 23 Aug. If a breakdown arises, look to 24,955 pts – obtained from the low of 15 Aug’s “Hammer” pattern – as the next support. Towards the upside, the immediate resistance is seen at 26,185 pts, which was the previous high of 29 Aug. The next resistance would likely be at the 26,684-pt record high.

Hence, we advise traders to maintain long positions, since we had originally 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 - 6 Sept 2018