Maintain long positions. The E-mini Dow formed another black candle last night. It declined 92 pts to close at 26,793 pts, off its high of 26,924 pts and low of 26,742 pts. Yet, we maintain our positive sentiment outlook, as the index failed to close below the 26,445-pt support mentioned previously. As the index is still holding above the rising 21-day SMA line, this shows that the upward momentum has not diminished yet. Overall, we believe the rebound – which started from 13 Jun’s “Hammer” pattern – may carry on.

As seen in the chart, we are eyeing the immediate support at 26,445 pts, determined from the low of 27 Jun. Meanwhile, the next support is maintained at 25,891 pts, ie the low of 13 Jun’s “Hammer” pattern. Towards the upside, we now anticipate the immediate resistance at the 27,009 pts historical high. If a decisive breakout arises, the next resistance would likely be at the 28,000-pt psychological spot.

Therefore, we advise traders to maintain long positions, given that we initially recommended initiating long above the 25,437-pt level on 7 Jun. At the same time, a trailing-stop can be set below the 26,445-pt mark in order to secure part of the gains.

Source: RHB Securities Research - 9 Jul 2019