Stay long while setting a trailing-stop below the 20,510-pt support. The E-mini Dow formed another black candle last night. It plunged 1,011 pts to settle at 20,740 pts. Based on the current outlook, we maintain our positive view, as the index has remained above the 10-day SMA line and the 20,510-pt support mentioned previously. Technically speaking, as long as the gains of 26 Mar’s white candle are not erased, this shows that the rebound is still in effect. As such, we believe that the bulls still have control over the market.

As shown in the chart, the immediate support level is seen at 20,510 pts, defined near the low of 26 Mar’s white candle. The crucial support is maintained at the 20,000-pt psychological spot. On the other hand, we anticipate the immediate resistance level at 22,545 pts, which was the high of 27 Mar. Meanwhile, the next resistance is anticipated at 23,850 pts, obtained near the high of 12 Mar.

Hence, we advise traders to stay long, following our recommendation of initiating long above the 20,280-pt level on 26 Mar. A trailing-stop can be set below the 20,510-pt threshold in order to limit the downside risk.

Source: RHB Securities Research - 2 Apr 2020