Stay long while setting a new trailing-stop below the 28,737-pt level. The E-mini Dow formed another positive candle last Friday. It gained 39 pts to close at 29,279 pts after hovering between a high of 29,362 pts and low of 29,242 pts. As the E-mini Dow has successfully marked a higher close vis-à-vis the previous sessions since 13 Jan, this can be viewed as the bulls extending their upward momentum. Technically, last Friday’s higher close can be viewed as a continuation of the bulls expanding the rebound from 8 Jan’s “Bullish Engulfing” pattern. As such, we believe the bulls are in control of the market.

Based on the daily chart, the immediate support level is now seen at 28,737 pts – this was determined from the low of 14 Jan. The next support will likely be at 28,084 pts, ie the low of 8 Jan’s “Bullish Engulfing” pattern. On the other hand, we now anticipate the near-term resistance level at the 29,500-pt round figure, which is followed by the 30,000-pt psychological mark.

To recap, we initially recommended traders to initiate long positions above the 28,159-pt level on 17 Dec 2019. We continue to advise them to stay long for now while setting a new trailing-stop below the 28,737-pt threshold. This is to lock in part of the profits.

Source: RHB Securities Research - 20 Jan 2020