Stay long while setting a trailing-stop below the 28,084-pt support. The E-mini Dow formed a white candle last night. It rose 94 pts to close at 28,871 pts, off its high of 28,907 pts and low of 28,775 pts. Based on the current outlook, we think the bulls may have regained control of the market. This was as last night’s white candle has recouped most of the previous day’s losses and marked a higher close above the rising 21-day SMA line. Overall, we expect the market to rise further if the immediate 29,022-pt resistance mentioned previously is taken out decisively in the coming sessions.

As shown in the chart, the immediate support level is seen at 28,341 pts, obtained near the lows of 31 Dec 2019 and 6 Jan. The next support would likely be at 28,084 pts, ie the low of 8 Jan’s “Bullish Engulfing” pattern. On the other hand, we are eyeing the near-term resistance level at the 29,022-pt historical high. This is followed by the 29,500-pt round figure.

Therefore, we advise traders to stay long, since we initially recommended initiating long above the 28,159-pt level on 17 Dec 2019. A trailing-stop can be set below the 28,084-pt mark in order to limit the downside risk.

Source: RHB Securities Research - 14 Jan 2020