Stay long, with a trailing-stop set below the 23,535-pt support. The E-mini Dow formed another black candle last Friday. It lost 611 pts to close at 23,619 pts, off the session’s high of 24,078 pts. Yet, the positive sentiment stays unchanged, as this candle can be viewed as the buyers probably taking a breather after the recent gains. Since the index has managed to remain above the previously indicated 23,535-pt support for a week, this indicates a positive sign. Overall, we believe the rebound that started off 22 Apr’s “Bullish Harami” pattern has not diminished so far.

Judging from the daily chart, we maintain the immediate support at 23,535 pts, ie 27 Apr’s low. If a breakdown arises, look to 22,814 pts – the low of 22 Apr’s “Bullish Harami” pattern – as the next support. On the other hand, the resistance level is now seen at 24,792 pts, which was the high of 30 Apr. This is followed by the 25,000-pt psychological mark.

Hence, 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 can be set below the 23,535-pt threshold to lock in part of the profits.

Source: RHB Securities Research - 4 May 2020