Maintain long positions while placing trailing-stop near 200-day SMA line. The E-mini Dow ended the latest session lower by 263 pts at 27,264 pts – after hitting a high of 27,624 pts. While the weak performance came on the back of an overbought RSI reading, it was insufficient to signal that the index’s rebound is due for a correction. Instead, it can be seen as minor profit-taking activity after the recent winning streak, which saw the index cross above the 200-day SMA line. Hence, we are keeping our positive trading bias.

Without a price reversal signal, we advise traders to stay long, following our recommendation of initiating long above the 24,000-pt level on 19 May. A stop-loss can now be set below the 26,250-pt level.

The immediate support is revised to the 27,000-pt round figure. This is followed by 26,250 pts – near the 200-day SMA line. Moving up, the immediate resistance is pegged at 28,234 pts – the high of 25 Feb. This is followed by 28,750 pts – near the high of 24 Feb.

Source: RHB Securities Research - 10 Jun 2020