Positive sentiment remains intact; stay long. The E-mini Dow formed a positive candle last night. It rose 53 pts to close at 26,993 pts, after oscillating between a high of 27,088 pts and low of 26,876 pts. From a technical viewpoint, we believe the bullish sentiment stays intact, as the index remains above the 21-day SMA line. Given that the index has marked a higher close vis-à-vis the previous session, this would imply that the upside move is likely to continue. As such, we think buyers are still in control of the market.

According to the daily chart, we are eyeing the immediate support level at 26,750 pts, situated at the low of 15 Oct. If price breaks down, the next support is seen at 25,983 pts, ie the low of 10 Oct’s “Hammer” pattern. Towards the upside, the immediate resistance level is anticipated at the 27,397-pt historical high. Meanwhile, the next resistance is maintained at the 28,000-pt psychological mark.

Thus, we advise traders to stay long, in line with our initial recommendation to have long positions above the 26,750- pt level on 16 Oct. A stop loss can be set below the 25,983-pt mark in order to limit the downside risk.

Source: RHB Securities Research - 18 Oct 2019