Positive sentiment remains unchanged; stay long. The E-mini Dow formed a white candle with a long lower shadow last night, signalling that the sellers had failed to reverse the positive sentiment. During the intraday session, it dropped to a low of 22,242 pts before pushing up to 23,153 pts at the end of the day. This is a sign that the buying momentum is not over yet. Technically speaking, at yesterday’s close, the index managed to climb above the 23,000-pt resistance mentioned previously after paring losses from an intraday low of 22,242 pts. This indicates that the outlook is still positive.

As seen in the chart, we are eyeing the immediate support level at 22,400 pts, situated near the midpoint of 26 Dec’s “Long White Day” candle. Meanwhile, the crucial support is maintained at 21,452 pts, which was the low of 26 Dec. On the other hand, we now anticipate the immediate resistance level at 24,086 pts, obtained from the high of 19 Dec. If the price breaks out, the next resistance would likely be at the 25,000-pt psychological spot.

Thus, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 22,400-pt level on 27 Dec. A stop-loss can be set below the 21,452-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 28 Dec 2018