Stay long. The E-mini Dow formed a black candle last Friday. It dropped 71 pts to close at 27,130 pts, off its high of 27,342 pts and low of 27,071 pts. Technically speaking, last Friday’s black candle should be viewed as a result of profit-taking activities following the recent gains. We believe that the bulls may continue to control the market as long as the index does not negate the bullishness of 9 Jul’s “Hammer” pattern. Overall, we keep our bullish view on the E-mini Dow’s outlook.

As seen in the chart, the immediate support level is seen at 26,657 pts, which was the low of 9 Jul’s “Hammer” pattern. If this level is taken out, look to 26,300 pts – ie near the midpoint of 18 Jun’s long white candle – as the next support. On the other hand, we are eyeing the near-term resistance level at the 27,397-pt record high. This is followed by 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. In the meantime, a trailing-stop can be set below the 26,657-pt mark in order to lock in part of the profits.

Source: RHB Securities Research - 22 Jul 2019