Stay long, with a new trailing-stop set below the 26,300-pt support. The E-mini Dow ended lower to form a black candle last night. It declined 200 pts to close at 26,562 pts, off the session’s high of 26,827 pts. However, the appearance of yesterday’s candle indicates that the buyers may be taking a breather following recent gains. Technically speaking, the bullish sentiment stays intact. This is as long as the index does not erase more than 50% of the gains from 18 Jun’s long white candle. Overall, we think that the rebound – which started from 13 Jun’s “Hammer” pattern – may persist.

Currently, we maintain the immediate support level at 26,300 pts, set near the midpoint of 18 Jun’s long white candle. The next support is seen at 25,891 pts, defined from the low of 13 Jun’s “Hammer” pattern. Towards the upside, the immediate resistance level is now anticipated at 26,827 pts, ie 25 Jun’s high. Meanwhile, the next resistance is anticipated at the 26,966-pt historical high.

Recall that on 7 Jun, we initially recommended traders to initiate long positions above the 25,437-pt level. We continue to advise them to stay long for now, while setting a new trailing-stop below the 26,300-pt threshold. This is in order to secure a larger part of the profits.

Source: RHB Securities Research - 26 Jun 2019