Stay long, with a trailing-stop set below the 25,679-pt level. The E-mini Dow formed a long white candle yesterday. It surged 1,085 pts to close at 26,965 pts. From a technical viewpoint, the market rebound is likely to continue in the coming sessions. This was after the index recouped the previous day’s losses and rose above the 26,000-pt mark. Yesterday’s white candle can be viewed as the bulls extending the rebound from 2 Mar’s “Bullish Engulfing” pattern. Overall, we stay positive on the E-mini Dow’s outlook.

Currently, we now anticipate the immediate support level at 26,500 pts, which is set near the midpoint of 4 Mar’s long white candle. The next support is seen at 25,679 pts, ie the low of 3 Mar. Towards the upside, we maintain the near-term resistance level at 27,231 pts, which is attached near the 200-day SMA line. This is followed by 27,519 pts, or the previous high of 26 Feb.

Consequently, we advise traders to maintain long positions, in line with our initial recommendation to have long positions above the 26,000-pt level on 3 Mar. A trailing-stop can be set below the 25,679-pt threshold to minimise the downside risks.

Source: RHB Securities Research - 5 Mar 2020