Stay long while setting a stop-loss below the 25,032-pt support. After posting three white candles in a row, the E-mini Dow ended lower to form a black candle yesterday. It declined 284 pts to close at 26,122 pts, off the session’s high of 26,372 pts. However, technically speaking, yesterday’s black candle can be viewed as the result of profit-taking activities post the recent gains. As the index is still trading above the 200-day SMA line, this suggests that the market rebound – which started off 6 Aug’s white candle – may persist. Overall, we keep our positive view on the E-mini Dow’s outlook.

Based on the daily chart, the immediate support level is seen at 25,032 pts, which was 6 Aug’s low. If this level is taken out, look to 24,610 pts – obtained from the previous low of 3 Jun – as the next support. On the other hand, the immediate resistance level is seen at 26,559 pts, ie the high of 30 Aug. Meanwhile, the next resistance would likely be at the 27,000-pt psychological spot.

Therefore, we advise traders to stay long, following our recommendation of initiating long above the 26,035-pt level on 9 Aug. A stop-loss can be set below the 25,032-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 4 Sept 2019