Uptrend remains intact; stay long. The E-mini Dow ended lower to form a black candle with a long lower shadow last Friday. It dropped to a low of 26,728 pts during the intraday session, before ending at 26,885 pts for the day. However, it is not surprising that the buyers may be taking a breather post the index recently registering a new historical high. On a technical basis, last Friday’s long lower shadow implied there was initial selling pressure during the day before the market moved up by the end of the trading session. This indicated that the market outlook was still bullish.

Presently, the immediate support is maintained at 26,445 pts, ie the low of 27 Jun. If a decisive breakdown occurs, the next support is seen at 25,891 pts, which was the low of 13 Jun’s “Hammer” pattern. On the other hand, the near-term resistance is anticipated at the 27,000-pt psychological mark. This is followed by the 28,000-pt round figure.

As a result, we advise traders to maintain long positions, since we had originally recommended initiating long above the 25,437-pt level on 7 Jun. Meanwhile, a trailing-stop can be set below the 26,445-pt threshold to lock in part of the profits.

Source: RHB Securities Research - 8 Jul 2019