Stay long provided that the 25,032-pt support is not violated at the closing. The E-mini Dow formed a long black candle last night. It tumbled 859 pts to settle at 25,455 pts. However, we believe the buying momentum is not diminished yet, as the index is still holding up above the recent low of 25,032-pt support mentioned previously. Technically speaking, last night’s long black candle indicates market pullback after the recent rebound, in our view. That said, a close below the 25,032-pt support is needed in order to confirm the return of the bears. As such, we remain positive on the E-mini Dow’s outlook.

As seen in the chart, we are eyeing the immediate support level at 25,032 pts, ie the recent low of 6 Aug. The next support is seen at 24,610 pts, determined from the previous low of 3 Jun. On the other hand, the immediate resistance level is maintained at 26,408 pts, which was the high of 13 Aug. If the price breaks out, the next resistance is seen at the 27,000-pt psychological mark.

Thus, we advise traders to stay long, given that we initially recommended initiating long above the 26,035-pt level on 9 Aug. A stop-loss is advisable to set below the 25,032-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 15 Aug 2019