Maintain long positions until prospect for deeper retracement is confirmed. The E-mini Dow extended its retracement for the second consecutive session following its recent failed attempt to cross above 26,779 pts. The latest session witnessed the index settling 221 pts lower at 26,322 pts. At this juncture, provided the 200-day SMA line is not breached, we believe the risk of the index developing a deeper retracement would still likely be contained. Hence, we are keeping our positive trading bias.

We advise traders to stay in long positions. For risk-management purposes, a stop-loss is recommended below the 26,150-pt mark.

We revise the immediate support to 26,150 pts, which is near the 200-day SMA line. This is followed by 25,874 pts – the low of 14 Jul. Moving up, the resistance level is maintained at 26,779 pts, or the high of 16 Jun. This is followed by the 27,000-pt round figure.

Source: RHB Securities Research - 27 Jul 2020