Stay long. The E-mini Dow formed a black candle last night. It declined 309 pts to close at 26,855 pts, off its high of 27,258 pts and low of 26,693 pts. The formation of last night’s black candle illustrates that the market may be taking a breather following recent gains. Still, we maintain our positive view, since the aforementioned black candle did not break below the 26,657-pt support mentioned previously. As the index did not negate the bullishness of 9 Jul’s “Hammer” pattern, this implies that the bullish sentiment stays unchanged.

As seen in the chart, the immediate support is anticipated 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. Towards the upside, we maintain the near-term resistance at the 27,397-pt record high. This is followed by the 28,000-pt psychological spot.

Hence, we advise traders to maintain long positions, since 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 26,657-pt mark in order to secure part of the profits.

Source: RHB Securities Research - 1 Aug 2019