Stay long, with a trailing-stop set below the 25,275-pt support. The E-mini Dow formed a “Doji” candle yesterday. It slipped 29 pts to close at 26,008 pts, after hovering between a high of 26,056 pts and low of 25,872 pts. Still, technically speaking, yesterday’s “Doji” candle can be viewed as the slight pullback following the recent surge. We think the bulls may continue to control the market. This is as long as the E-mini Dow does not erase the gains from 15 Feb‘s long white candle. As the index is still trading above the rising 21-day SMA line, this suggests that the market rebound – which started off 26 Dec 2018’s “Long White Day” candle – may persist.

Based on the daily chart, we are eyeing the immediate support level at 25,275 pts, which was the low of 15 Feb’s long white candle. The next support is seen at 24,284 pts, ie near the lows of 23 and 28 Jan. On the other hand, the immediate resistance level is seen at 26,268 pts, defined from the high of 8 Nov 2018. Meanwhile, the next resistance would likely be at the 26,966-pt historical high.

Hence, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 22,400-pt level on 27 Dec 2018. In the meantime, a trailing-stop can be set below the 25,275-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 28 Feb 2019