Maintain long positions while setting a stop-loss below the 24,086-pt support. The E-mini Dow ended lower to form a “Doji” candle last Friday. It settled at 25,241 pts, off its high of 25,684 pts and low of 25,035 pts. Yet, the emergence of last Friday’s “Doji” candle indicates that the buyers may be taking a breather after the recent gains. From a technical perspective, as long as the index does not negate the bullishness of 30 Oct’s “Bullish Engulfing” pattern, there is a possibility that the rebound will continue. Overall, we maintain our positive view on the E-mini Dow’s outlook.

According to the daily chart, we anticipate the immediate support level at 24,823 pts, ie the low of 31 Oct. The next support is seen at 24,086 pts, obtained from the low of 30 Oct’s “Bullish Engulfing” pattern. Towards the upside, the immediate resistance level is seen at 25,845 pts, which was the high of 17 Oct. Meanwhile, the next resistance is maintained at 26,522 pts, situated at the high of 10 Oct’s long black candle.

Hence, we advise traders to stay long, in line with our initial recommendation to have long positions above the 24,823-pt level on 1 Nov. A stop-loss is preferably set below the 24,086-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 5 Nov 2018