Initiate long positions above the 25,437-pt level. The E-mini Dow formed a white candle last night. It rose 187 pts to close at 25,745 pts. From a technical perspective, the index successfully breached above the downtrend line drawn in the chart and posted a fourth consecutive white candle, implying that the sentiment has turned positive. This can be viewed as a continuation of the buyers extending the rebound from the recent low of 3 Jun. Meanwhile, 4 Jun’s closing has also triggered our previous trailing-stop recommendation at the 25,215-pt threshold – which has locked in part of the profits – since we initially advised traders to initiate short positions below the 26,000-pt level on 10 May.

Judging from the current outlook, we anticipate the immediate support level at 25,437 pts, ie the low of 6 Jun. The next support is seen at 24,610 pts, which was the recent low of 3 Jun. To the upside, the near-term resistance level is situated at 26,148 pts, defined from 2 May’s low. This is followed by 26,694 pts, obtained from the previous high of 24 Apr.

Hence, we advise traders to initiate long positions above the 25,437-pt level. A stop-loss can be set below the 24,610-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 7 Jun 2019