Stay long, with a trailing-stop set below the 26,657-pt support. The E-mini Dow ended lower to form a black candle last night. It declined 97 pts to close at 27,231 pts, after oscillating between a high of 27,377 pts and low of 27,184 pts. Based on the current outlook, we maintain our bullish view, as the index has remained above the rising 21-day SMA line. Technically, as long as the bullishness of 9 Jul’s “Hammer” pattern is not nullified, the upside swing is still in effect. As such, we believe the bulls still have control over the market.

Based on the daily chart, we are eyeing the immediate support at 26,657 pts, ie the low of 9 Jul’s “Hammer” pattern. The next support would likely be at 26,300 pts, set near the midpoint of 18 Jun’s long white candle. To the upside, the immediate resistance is now anticipated at the 27,397-pt historical high. If a breakout arises, the next resistance is seen at the 28,000-pt psychological mark.

Hence, we advise traders to maintain long positions, following our recommendation to initiate long above the 25,437-pt level on 7 Jun. Meanwhile, a trailing-stop is advisable below the 26,657-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 18 Jul 2019