Maintain long positions. The E-mini Dow ended lower to form a black candle last night. It declined 176 pts to close at 26,158 pts, off its high of 26,349 pts and low of 26,104 pts. Still, the emergence of 8-9 Apr’s black candles can be viewed as profit-taking activities after the recent gains. Given that the index has continued to stay above the rising 21-day SMA line, this implies that the bullish sentiment remains intact. Overall, we believe the rebound – which started from 8 Mar’s “Hammer” pattern – may carry on.

According to the daily chart, the immediate support is situated at the 26,000-pt psychological spot. The next support will likely be at 25,213 pts, ie the low of 8 Mar’s “Hammer” pattern. Towards the upside, the immediate resistance is now seen at 26,509 pts, which was obtained from the high of 5 Apr. The next resistance is maintained at the 26,966-pt record high.

As a result, we advise traders to maintain long positions, given that we previously recommended initiating long above the 26,000-pt level on 2 Apr. In the meantime, a stop-loss can be set below the 25,213-pt threshold to minimise the downside risk.

Source: RHB Securities Research - 10 Apr 2019