Stay long. After posting two white candles in a row, the E-mini Dow ended lower to form a black candle last Friday. It declined 118 pts to close at 23,035 pts, off its high of 23,372 pts and low of 22,957 pts. However, Last Friday’s black candle can be viewed as a weak pullback after the recent gains. From a technical viewpoint, the market sentiment is still considered positive, given that the index did not erase the gains from 26 Dec’s “Long White Day” candlestick. Overall, we believe the rebound that started from the aforementioned candlestick may continue.

According to the daily chart, we anticipate the immediate support level at 22,400 pts, set near the midpoint of 26 Dec’s “Long White Day” candle. If this level is taken out, the next support is maintained at 21,452 pts, obtained from the low of 26 Dec. To the upside, the immediate resistance level is maintained at 24,086 pts, ie the high of 19 Dec. Meanwhile, the next resistance is seen at the 25,000-pt psychological mark.

Hence, we advise traders to maintain long positions, following our recommendation of initiating long above the 22,400-pt level on 27 Dec. In the meantime, a stop-loss can be set below the 21,452-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 31 Dec 2018