Maintain long positions, with a stop-loss set below the 25,032-pt support. The E-mini Dow formed a black candle last night. It lost 401 pts to close at 25,867 pts, after oscillating between a high of 26,353 pts and low of 25,803 pts. The formation of last night’s black candle illustrates that the market may be taking a breather following the recent gains. Still, we maintain our positive sentiment, since yesterday’s black candle did not break below the recent low of 25,032-pt support. Technically, as long as the index does not erase the gains from 6 Aug’s white candle, this implies that the positive sentiment remains unchanged.

As seen in the chart, we are eyeing the immediate support level at 25,032 pts, determined from the recent low of 6 Aug. If this level is taken out, look to 24,610 pts – ie the previous low of 3 Jun – as the next support. On the other hand, we anticipate the immediate resistance level at 26,394 pts, defined from 9 Aug’s high. Meanwhile, the next resistance would likely be at the 27,397-pt record high.

Thus, we advise traders to maintain long positions, given that we initially recommended initiating long above the 26,035-pt level on 9 Aug. A stop-loss can be set below the 25,032-pt mark in order to minimise the downside risk.

Source: RHB Securities Research - 13 Aug 2019