Stay long while setting a trailing-stop below the 25,764-pt support. Last night, the E-mini Dow recouped the previous session’s losses and formed a long white candle – surging 198 pts to close at 26,274 pts, off the session’s high of 26,331 pts and low of 25,966 pts. On a technical basis, yesterday’s closing has taken out the previously indicated 26,237-pt resistance and sent the E-mini Dow to its highest point in more than seven months. This indicates that the buying momentum has extended. Overall, we believe the upside swing from 11 Sep’s “Bullish Engulfing” pattern may continue.

According to the daily chart, we maintain the immediate support at 25,764 pts, ie the low of 11 Sep’s “Bullish Engulfing” pattern. If this level is taken out decisively, look to 24,955 pts – which was the previous low of 15 Aug – as the next support. On the other hand, we are now eyeing the near-term resistance at the 26,684-pt record high. This is followed by the 27,000-pt psychological spot.

Therefore, 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 advisable below the 25,764-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 19 Sept 2018