Initiate long positions above the 26,035-pt level. The E-mini Dow ended higher to form another white candle last night. It rose 425 pts to close at 26,365 pts, off the session’s low of 25,846 pts. From a technical perspective, the index has breached above the 26,000-pt resistance mentioned previously, and formed a third consecutive white candle. This implies that sentiment has turned positive. This can be viewed as a continuation of buyers extending the rebound from the recent low of 6 Aug. Meanwhile, yesterday’s closing also triggered our trailing-stop, which we previously recommended that investors set at the 26,000-pt mark.

Presently, we anticipate the immediate support at 26,035 pts, obtained from the high of 7 Aug. The crucial support is seen at 25,032 pts, which was the recent low of 6 Aug. Towards the upside, the immediate resistance is situated at 26,663 pts, ie 2 Aug’s high. If this level is taken out, the next resistance is seen at the 27,397-pt historical high.

Hence, we advise traders to initiate fresh long positions above the 26,035-pt level. A stop-loss can be set below the 25,032-pt threshold in order to limit downside risk.

Source: RHB Securities Research - 9 Aug 2019