Stay long while setting a trailing-stop below the 23,428-pt support. The E-mini Dow formed a black candle last night. It lost 550 pts to settle at 23,574 pts, off the session’s high of 24,293 pts. However, we believe the upward momentum is not diminished yet, as the index has not erased the gains from 7-8 May’s white candles. Last night’s black candle indicates profit-taking activities after the recent gains, in our view. Overall, we expect the market to rise further if the 24,792-pt resistance is taken out decisively in the coming sessions.

As seen in the chart, the immediate support level is seen at 23,428 pts, set at the low of 7 May. The next support is anticipated at 22,814 pts, determined from the low of 22 Apr’s “Bullish Harami” pattern. Towards the upside, we maintain the immediate resistance level at 24,792 pts, ie the high of 30 Apr. Meanwhile, the next resistance is situated at the 25,000-pt psychological spot.

Hence, 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 23,428-pt mark in order to secure part of the gains.

Source: RHB Securities Research - 13 May 2020