Stay long, with a trailing-stop set below the 20,510-pt support. The E-mini Dow formed a black candle last night. It lost 416 pts to close at 21,751 pts, off the session’s high of 22,386 pts. Still, the positive sentiment stays unchanged, as this candle can only be viewed as buyers probably taking a breather after the recent gains. Since the index is still holding above the 10-day SMA line, this indicates the upside swing is not over yet. Overall, we believe the rebound that started off 24 Mar’s long white candle will likely persist in the coming sessions.

Based on the daily chart, we maintain the immediate support level at 20,510 pts – this is set near the low of 26 Mar’s white candle. Meanwhile, the next support is seen at the 20,000-pt psychological mark. Towards the upside, we are eyeing the immediate resistance level at 22,545 pts, ie the high of 27 Mar. The next resistance will likely be at 23,850 pts – near the high of 12 Mar.

Therefore, we advise traders to maintain long positions, since we originally recommended initiating long above the 20,280-pt level on 26 Mar. In the meantime, a trailing-stop set below the 20,510-pt threshold is preferable to minimise the downside risk.

Source: RHB Securities Research - 1 Apr 2020