Stay long. The E-mini Dow formed a long black candle last night. It declined 284 pts to close at 27,789 pts, off the session’s high of 28,197 pts. However, from a technical viewpoint, yesterday’s black candle should be viewed as a result of profit-taking activities following the recent gains. We believe the bulls may continue to control the market, since the E-mini Dow has not negated the bullishness of 20 Nov’s “Hammer” pattern. Moreover, as the index continues to hold above the rising 21-day SMA line, the bullish sentiment stays unchanged.

According to the daily chart, we are eyeing the immediate support level at 27,643 pts, which was the low of 20 Nov’s “Hammer” pattern. The next support will likely be at 27,337 pts – this was obtained from the low of 6 Nov. Towards the upside, the near-term resistance level is now anticipated at the 28,197-pt historical high. This is followed by the 28,500-pt round figure.

Therefore, we advise traders to stay long, given that we initially recommended initiating long above the 26,750-pt level on 16 Oct. In the meantime, a trailing-stop set below the 27,643-pt threshold is preferable to lock in part of the gains.

Source: RHB Securities Research - 3 Dec 2019