Maintain long positions. After struggling near the immediate support, the E-Mini Dow fell below it yesterday to close 200 pts lower at 35,160 pts. It began with a positive tone at 35,384 pts and whipsawed towards the start of US trading session – it reached the day peak of 35,441 pts. However, selling pressure then emerged and the index shifted direction southwards to mark the 35,146-pt day low before bouncing off mildly at the close. The latest long black candlestick, which formed a “bearish engulfing” pattern, signals that the short-term downward momentum is imminent towards the 35,082-pt immediate support. However, the medium-term direction remains above the level to form a “higher low” pattern. Until the stop-loss mark is triggered, we stick to our positive trading bias.

We suggest traders maintain the long positions initiated at the closing level of 24 Aug, or 35,314 pts. For risk management, the initial stop-loss threshold is set below 35,000 pts.

The immediate support is lowered to 35,082 pts – 2 Aug’s high – and followed by 34,569 pts, or 20 Aug’s low. The nearest resistance is set at 35,286 pts – 18 Aug’s high – and then 35,547 pts, ie 16 Aug’s high.

Source: RHB Securities Research - 27 Aug 2021