Positive sentiment remains intact; stay long. The E-mini Dow ended lower to form a black candle last Friday. It lost 239 pts to close at 26,754 pts, off its high of 27,023 pts and low of 26,726 pts. Technically speaking, last Friday’s black candle should be viewed as a result of profit-taking activities following the recent gains. We believe that the bulls may continue to control the market as long as the index does not negate the bullishness of 10 Oct’s “Hammer” pattern. Overall, we keep our bullish view on the E-mini Dow’s outlook.

As seen in the chart, we now anticipate the immediate support level at 26,496 pts, determined from the low of 11 Oct. The next support would likely be at 25,983 pts, which was the low of 10 Oct’s “Hammer” pattern. To the upside, we are eyeing the immediate resistance level at 27,088 pts, ie the high of 17 Oct. Meanwhile, the next resistance is maintained at the 27,397-pt record high.

Hence, we advise traders to stay long, following our recommendation of initiating long above the 26,750-pt level on 16 Oct. A stop loss is preferably set below the 25,983-pt threshold in order to minimise the downside risk.

Source: RHB Securities Research - 21 Oct 2019