Stay long. After posting two black candles in a row, the E-mini Dow ended higher to form a white candle last night. It rose 533 pts to close at 21,273 pts, after hovering between a high of 21,374 pts and low of 20,500 pts. Given that the index has managed to stay above the 10-day SMA line for more than a week, this suggests that the rebound is not over yet. Moreover, 1-2 Apr’s candle has formed a “Bullish Harami” pattern, suggesting additional buying momentum may be present in the coming sessions. Overall, we keep a positive view on the E-mini Dow’s outlook.

According to the daily chart, we are now eyeing the immediate support level at 20,500 pts, obtained from the low of 2 Apr’s “Bullish Harami” pattern. The next support is seen at the 20,000-pt psychological mark. Towards the upside, we now anticipate the near-term resistance level at the 22,000-pt round figure. This is followed by 22,545 pts, ie the previous high of 27 Mar.

Thus, we advise traders to maintain long positions, since we previously recommended initiating long above the 20,280-pt level on 26 Mar. For now, a trailing-stop set below the 20,500-pt threshold is advisable in order to minimise the risk per trade.

Source: RHB Securities Research - 3 Apr 2020