Stay long, with a new trailing-stop set below the 24,284-pt level. The E-mini Dow formed a negative candle with a long lower shadow last Friday. It declined to a low of 24,862 pts during the intraday session, before ending at 25,081 pts for the day. However, it is not surprising that buyers may be taking a breather following the recent gains. From a technical perspective, last Friday’s long lower shadow implied that there was initial selling momentum during the day before the market moved up by the end of the trading session. This indicates that the outlook was still bullish.

Based on the daily chart, we are now eyeing the immediate support level at 24,284 pts, determined near the lows of 23 and 28 Jan. If the price breaks down, the next support is maintained at the 24,000-pt psychological spot. To the upside, the immediate resistance level is seen at 25,387 pts, ie the high of 6 Feb. Meanwhile, the next resistance is anticipated at 26,088 pts, obtained from the previous high of 3 Dec 2018.

Recall that on 27 Dec 2018, we initially recommended traders to initiate long positions above the 22,400-pt level. We continue to advise them to stay long for now, while setting a new trailing-stop below the 24,284-pt threshold. This is in order to lock in a larger part of the profits.

Source: RHB Securities Research - 11 Feb 2019