Stay long, with a trailing-stop set below the 22,563-pt support. The buying momentum in the E-mini Dow continued as expected. A white candle was formed last night that pointed towards a continuation of the upside move. It rose 117 pts to close at 23,984 pts after oscillating between a high of 24,073 pts and low of 23,825 pts. Technically speaking, as the 14-day RSI indicator rose above the 50 neutral point to flash a bullish reading at 52.62 pts, this indicates the upside swing is not over yet. Overall, we expect the market to rise further if the immediate 24,086-pt resistance mentioned previously is taken out decisively in the coming sessions.

As seen in the chart, the immediate support is seen at 22,563 pts, ie the low of 4 Jan. The crucial support is anticipated at 21,452 pts, which was the low of 26 Dec 2018’s “Long White Day” candle. On the other hand, we are eyeing the immediate resistance at 24,086 pts – this was determined near the high of 19 Dec 2018. Meanwhile, the next resistance is likely to be at the 25,000-pt psychological spot.

Consequently, we advise traders to stay long, following our recommendation to initiate long above the 22,400-pt level on 27 Dec 2018. In the meantime, a trailing-stop can be set below the 22,563-pt threshold to minimise the downside risk.

Source: RHB Securities Research - 16 Jan 2019