Stay long, with a stop-loss set below the 25,032-pt support. The E-mini Dow’s upward momentum continued as expected. A white candle was formed last night, which points to a continuation of the upside move. It gained 295 pts to close at 26,226 pts, after oscillating between a high of 26,265 pts and low of 25,872 pts. We note that yesterday’s candle has recouped the previous day’s losses and marked a higher close above the 200-day SMA line, which suggests that bullish sentiment remains unchanged. Overall, we expect the market to rise further if the immediate 26,408-pt resistance is taken out decisively in the coming sessions.

As seen in the chart, we anticipate the immediate support level at 25,032 pts, which was the previous low of 6 Aug. The next support would likely be at 24,610 pts, ie the low of 3 Jun. On the other hand, the immediate resistance level is maintained at 26,408 pts, defined from 13 Aug’s high. If this level is taken out, the next resistance is seen at the 27,000-pt psychological spot.

Thus, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 26,035-pt level on 9 Aug. A stop-loss can be set below the 25,032-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 22 Aug 2019