Maintain long positions. The E-mini Dow formed a white candle last night. It gained 43 pts to close at 26,797 pts, after oscillating between a high of 26,837 pts and low of 26,701 pts. The market sentiment remains positive as the index has continued to remain above the 21-day SMA line. From a technical perspective, as long as the Emini Dow does not negate the bullishness of 10 Oct’s “Hammer” pattern, there is a possibility that the rebound would persist. Overall, we remain upbeat on the E-mini Dow’s outlook.

According to the daily chart, the immediate support level is anticipated at 26,496 pts, obtained from the low of 11 Oct. If a breakdown arises, look to 25,983 pts – ie the low of 10 Oct’s “Hammer” pattern – as the next support. On the other hand, the immediate resistance level is seen at 27,088 pts, which was the high of 17 Oct. The next resistance is situated at the 27,397-pt historical high.

Therefore, we advise traders to maintain long positions, given that we previously recommended initiating long above the 26,750-pt level on 16 Oct. In the meantime, a stop-loss can be set below the 25,983-pt mark in order to limit the downside risk.

Source: RHB Securities Research - 22 Oct 2019