Stay long. The E-mini Dow ended lower to form a long black candle last Friday. It plunged 555 pts to close at 25,670 pts, off the session’s high of 26,347 pts. However, the index has failed to close below the 200-day SMA line and the 25,032-pt support mentioned previously, which implies that the bulls are still in control of the market. Technically speaking, the positive sentiment would remain intact as long as the index does not erase the gains from 6 Aug’s white candle. Overall, we keep our positive view on the index’s outlook.

Based on the daily chart, the immediate support level is seen at 25,032 pts, ie the previous low of 6 Aug. If a breakdown arises, the next support is anticipated at 24,610 pts, which was the low of 3 Jun. Towards the upside, we maintain the immediate resistance level at 26,408 pts, ie 13 Aug’s high. Meanwhile, the next resistance would likely be at the 27,000-pt psychological mark.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 26,035-pt level on 9 Aug. In the meantime, a stop-loss is advisable to set below the 25,032-pt mark in order to minimise the downside risk.

Source: RHB Securities Research - 26 Aug 2019