Stay long, while setting a trailing-stop below the 20,500-pt support. The E-mini Dow ended lower to form a black candle last Friday. It declined 316 pts to close at 20,957 pts, after oscillating between a high of 21,352 pts and low of 20,740 pts. However, from a technical viewpoint, the aforementioned black candle can only be viewed as a weak pullback after the recent rebound. We think the bulls may continue to control the market, given that the index did not negate the bullishness of 2 Apr’s “Bullish Harami” pattern. Overall, we keep our positive view on the E-mini Dow’s outlook.

As seen in the chart, the immediate support level is maintained at 20,500 pts, determined from the low of 2 Apr’s “Bullish Harami” pattern. If a decisive breakdown arises, the next support is seen at the 20,000-pt psychological spot. On the other hand, we are eyeing the near-term resistance level at the 22,000-pt round figure. This is followed by 22,545 pts, which was the previous high of 27 Mar.

Therefore, 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 20,500-pt mark in order to limit the downside risk.

Source: RHB Securities Research - 6 Apr 2020