Market is trading above the rising 10-day SMA line; stay long. The E-mini Dow ended lower to form a black candle yesterday. It declined 309 pts to close at 23,309 pts. However, it is not surprising that buyers may be taking a breather following the recent gains. As the index failed to erase the gains from 8-9 Apr’s white candles, this implies that the positive sentiment stays intact. In conjunction with the rising 10-day SMA line, we believe that the upside swing – which started from 2 Apr’s “Bullish Harami” pattern – may continue.

As seen in the chart, we anticipate the immediate support level at 22,545 pts, near the high of 27 Mar. If a breakdown occurs, the next support is seen at 21,700 pts, ie near the midpoint of 6 Apr’s long white candle. To the upside, the immediate resistance level is situated at the 24,000-pt round figure, also near 13 Apr’s high. Meanwhile, the next resistance is set at the 25,000-pt psychological spot.

Therefore, we advise traders to stay long, given that we previously recommended initiating long above the 20,280- pt level on 26 Mar. In the meantime, a trailing-stop can be set below the 22,545-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 14 Apr 2020