Maintain long positions. The E-mini Dow ended lower to form a black candle last night. It declined 87 pts to close at 27,237 pts, after oscillating between a high of 27,346 pts and low of 27,175 pts. Unsurprisingly, yesterday’s black candle can be viewed as a result of profit-taking activities following recent gains over the last two weeks. As the 21-day SMA line is pointing upwards, we believe the upside swing, which began with 9 Jul’s “Hammer” pattern, may persist. Overall, we remain bullish on the E-mini Dow’s outlook.

According to 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 – situated near the midpoint of 18 Jun’s long white candle. Towards the upside, we maintain the near-term resistance at the 27,397-pt historical high. This is followed by the 28,000-pt psychological mark.

Therefore, we advise traders to stay long, following our recommendation to initiate long above the 25,437-pt level on 7 Jun. In the meantime, a trailing-stop is advisable below the 26,657-pt mark in order to secure part of the gains.

Source: RHB Securities Research - 25 Jul 2019