Stay long. After rising for four consecutive sessions, the E-mini Dow ended lower to form a black candle last night. It declined 297 pts to close at 24,390 pts, off its high of 24,702 pts and low of 24,216 pts. However, the bullish sentiment stays intact as this candle can only be viewed as buyers probably taking a breather after the recent surge. We think the rebound will likely continue as long as the index fails to erase the gains from 15-18 Jan’s white candles. Given that the E-mini Dow is still trading above the 21-day SMA line, this implies that the upside swing that started from 26 Dec 2018’s “Long White Day” candle may carry on.

As seen in the chart, the immediate support is maintained at 23,696 pts, ie the low of 14 Jan. Meanwhile, the next support is seen at 22,563 pts, which was the low of 4 Jan. Towards the upside, the resistance is anticipated at 24,844 pts, obtained from the high of 12 Dec 2018. This is followed by 26,088 pts, ie the previous high of 3 Dec 2018.

Hence, we advise traders to maintain long positions, given that we initially recommended initiating long above the 22,400-pt level on 27 Dec 2018. A trailing-stop can be set below the 23,696-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 23 Jan 2019