Maintain long positions. The E-mini Dow formed a white candle yesterday. The index gained 97 pts to close at 26,002 pts, after oscillating between a high of 26,038 pts and low of 25,764 pts. From a technical perspective, we expect that the near-term upside move is likely to continue. This is because the E-mini Dow has recouped the previous two sessions’ losses and stayed above the rising 21-day SMA line, implying that the market sentiment is bullish. Overall, we think that the rebound – which started from 15 Aug’s “Hammer” pattern – may persist.

According to the daily chart, we are eyeing the immediate support level at 25,607 pts, determined from the low of 23 Aug. If this level is taken out, look to 24,955 pts – ie the low of 15 Aug’s “Hammer” pattern – as the next support. On the other hand, the immediate resistance level is seen at 26,185 pts, obtained from the previous high of 29 Aug. Meanwhile, the next resistance is maintained at the 26,684-pt record high.

Hence, we advise traders to maintain long positions. This is following our recommendation of initiating long above the 24,600-pt level on 11 Jul. A trailing-stop set below the 25,607-pt threshold is preferable in order to lock in part of the profits.

Source: RHB Securities Research - 12 Sept 2018