Maintain long positions while setting a trailing-stop below the 26,000-pt support. The E-mini Dow ended higher to form a white candle last Friday. It gained 234 pts to close at 26,499 pts, after oscillating between a high of 26,518 pts and low of 26,245 pts. We believe the upside move is not over yet, as the index has recouped the previous session’s losses and climbed above the 21-day SMA line. Technically speaking, last Friday’s white candle can be viewed as a continuation of the rebound that started from 8 Mar’s “Hammer” pattern.

As seen in the chart, we anticipate the immediate support level at the 26,000-pt round figure, also set near the low of 11 Apr. If this level is taken out, look to 25,213 pts – which was the low of 8 Mar’s “Hammer” pattern – as the next support. Towards the upside, the immediate resistance level is seen at 26,694 pts, ie the high of 24 Apr. The next resistance would likely be at the 26,966-pt record high.

Therefore, we advise traders to stay long, since we initially recommended initiating long above the 26,000-pt level on 2 Apr. In the meantime, a trailing-stop can be set below the 26,000-pt mark as well in order to limit the downside risk.

Source: RHB Securities Research - 6 May 2019