Bullish sentiment remains unchanged; stay long. The E-mini Dow formed a black candle yesterday. It declined 82 pts to close at 26,076 pts, off its high of 26,195 pts and low of 26,042 pts for the day. Based on the current technical landscape, the near-term market sentiment remains positive, as the index has continued to hold above the rising 21-day SMA line and the previously-indicated 25,764-pt support. Technically speaking, as the “Bullish Engulfing” pattern that formed on 11 Sep has not been cancelled, this shows that the near-term upside swing stays intact. Overall, the near-term market trend remains bullish.

As seen in the chart, we anticipate the immediate support level at 25,764 pts, determined from the low of 11 Sep’s “Bullish Engulfing” pattern. Meanwhile, the next support is maintained at 24,955 pts, ie the previous low of 15 Aug. To the upside, the immediate resistance level is now seen at 26,237 pts, which was the high of 14 Sep. If this level is taken out decisively, the next resistance is situated at the 26,684-pt historical high.

Hence, 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. Meanwhile, a trailing-stop is preferably set below the 25,764-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 18 Sept 2018