Initiate long positions above the 25,223-pt level. The E-mini Dow ended higher to form a white candle last Friday. It rose 148 pts to close at 25,539 pts, off its high of 25,602 pts and low of 25,223 pts. As the index formed a fifth consecutive white candle and climbed above the 21-day SMA line, this indicates that market sentiment is turning positive. In addition, the 14-day RSI indicator rose above the 50 neutral point to flash a bullish reading at 54.84 pts, thereby enhancing the bullish sentiment. Last Friday’s closing also triggered our stop-loss, which we previously recommended at the 25,492-pt threshold.

As seen in the chart, we eye the immediate support at 25,223 pts, which was the low of 30 Nov. The next support is anticipated at 24,727 pts – this was determined from the low of 28 Nov’s long white candle. Towards the upside, the immediate resistance is seen at 26,268 pts, ie the high of 8 Nov. Meanwhile, the next resistance should likely be at the 26,966-pt historical high.

We advise traders to initiate long positions above the 25,223-pt level. A stop-loss can be set below the 24,727-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 3 Dec 2018