Initiate long positions, as the rebound is deeper than expected. The E-mini Dow ended its latest session above the 200-day SMA line, albeit marginally. The index closed 523 pts higher at 26,491 pts after trading in a 25,874- 26,575-pt range. The closing level also placed the E-mini Dow above the previous immediate resistance of 26,294 pts. This positive performance means its rebound is stronger than what we had earlier anticipated and invalidated our previous bias for the correction phase – which started from the high of 27,624 pts on 9 Jun – to extend. We switch our trading bias to positive from negative.

Our previous short positions were initiated at 25,165 pts, which was the closing level of 11 Jun. This was closed out at 26,294 pts during the latest session. Concurrently, we initiate long positions at the latest closing level. For risk-management purposes, a stop-loss is recommended below the 26,150-pt mark.

The immediate support is revised to 26,150 pts, which is near the 200-day SMA line. This is followed by 25,874 pts, or the latest low. Moving up, the resistance level is eyed at 26,779 pts, ie the high of 16 Jun. This is followed by the 27,000-pt round figure.

Source: RHB Securities Research - 15 Jul 2020