Maintain long positions. The E-mini Dow ended lower to form a black candle last night. It slipped 34 pts to close at 27,164 pts, after hovering between a high of 27,252 pts and low of 27,042 pts. Based on the current outlook, we maintain our bullish view, as the index has remained above the rising 21-day SMA line. Technically speaking, 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 is seen at 26,300 pts, determined near the midpoint of 18 Jun’s long white candle. To the upside, the near-term resistance is anticipated 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 can be set below the 26,657-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 31 Jul 2019