Stay long. The E-mini Dow formed a black candle last night. It declined 162 pts to close at 24,124 pts, off its high of 24,471 pts and low of 23,973 pts. Still, the bullish sentiment stays unchanged as this candle can only be viewed as buyers probably taking a breather after the recent gains. As the index recently climbed above the 10-day SMA line and the 24,000-pt mark, this indicates the presence of upside strength. Overall, we believe the market rebound that started off 22 Apr’s “Bullish Harami” pattern would likely persist in the coming sessions.

Presently, we anticipate the support level at 23,428 pts, ie the low of 7 May. This is followed by 23,814 pts, obtained from the low of 22 Apr’s “Bullish Harami” pattern. On the other hand, the immediate resistance level is seen at 24,792 pts, which was the high of 30 Apr. If a breakout arises, the next resistance would likely be at the 25,000-pt psychological mark.

To recap, on 26 Mar, we initially recommended traders to initiate long positions above the 20,280-pt level. We continue to advise them to stay long for now, while setting a trailing-stop below the 23,428-pt threshold. This is in order to lock in a larger part of the profits.

Source: RHB Securities Research - 12 May 2020