Stay long while setting a new trailing-stop below the 25,000-pt level. The E-mini Dow’s upside strength continued as expected after it ended higher to form another positive candle last night. It rose 200 pts to close at 25,641 pts, after oscillating between a high of 25,660 pts and low of 25,365 pts. As the index has successfully posted a positive candle for the sixth consecutive session, this can be viewed as the bulls extending their buying momentum. Furthermore, as the E-mini Dow marked a higher close above the 21-day SMA line, the bullish sentiment stays intact.

As seen in the chart, the immediate support level is now seen at the 25,000-pt psychological mark. If a decisive breakdown arises, look to 24,086 pts – which was the low of 30 Oct’s “Bullish Engulfing” pattern – as the next support. To the upside, we are eyeing the immediate resistance level at 25,845 pts, determined from the high of 17 Oct. The next resistance would likely be at 26,522 pts, ie the high of 10 Oct’s long black candle.

Therefore, we advise traders to maintain long positions, given that we initially recommended traders to initiate long positions above the 24,823-pt level on 1 Nov. For now, a new trailing-stop can be set below the 25,000-pt threshold in order to limit the risk per trade.

Source: RHB Securities Research - 7 Nov 2018