Stay long. The E-mini Dow ended lower to form a long black candle last night. It lost 905 pts to close at 26,060 pts – this was off the session’s high of 26,973 pts. Yet, the emergence of yesterday’s black candle indicates that the buyers may be taking a breather after the recent surge. Given that the index has failed to erase the gains from 4 Mar’s long white candle, this implies that the positive sentiment remains intact. Overall, we think the rebound, which started from 2 Mar’s “Bullish Engulfing” pattern, has not diminished yet.

As seen the in chart, the immediate support level is seen at 25,688 pts – this was determined from the low of 4 Mar’s long white candle. Meanwhile, the next support is anticipated at the 25,000-pt psychological mark. On the other hand, we are eyeing the immediate resistance level at 26,500 pts, ie near the midpoint of 5 Mar’s long black candle. If a decisive breakout arises, look to 27,075 pts – the high of 4 Mar – as the next resistance.

Therefore, we advise traders to stay long, following our recommendation to initiate long above the 26,000-pt level on 3 Mar. A trailing-stop set below the 25,688-pt mark is advisable to limit the downside risk.

Source: RHB Securities Research - 6 Mar 2020