Stay long, with a new trailing-stop set below the 25,437-pt support. The E-mini Dow formed a “Doji” candle last night. It settled at 26,065 pts after oscillating between a high of 26,261 pts and low of 26,009 pts throughout the day. Still, technically speaking, 10-11 Jun’s candles can be viewed as the result of profit-taking activities post the recent surge. As the index is still trading above the 21-day SMA line, this indicates that market sentiment remains positive. Furthermore, as the 14-day RSI indicator rose above the 50 neutral point to flash a bullish reading at 57.23 pts, the positive sentiment has been enhanced.

As seen in the chart, we are eyeing the immediate support at 25,437 pts, which was the low of 6 Jun. If a breakdown arises, look to 24,610 pts – determined from the recent low of 3 Jun – as the next support. On the other hand, the immediate resistance is seen at 26,289 pts, which was obtained from the high of 10 Jun. Meanwhile, the next resistance is anticipated at 26,694 pts, or the previous high of 24 Apr.

Therefore, we advise traders to maintain long positions – this is in line with our initial recommendation of having long positions above the 25,437-pt level on 7 Jun. For now, a new trailing-stop can be set below the 25,437-pt threshold as well to limit the risk per trade.

Source: RHB Securities Research - 12 Jun 2019