Maintain long positions. Last Friday, the E-mini Dow failed to sustain most of its intraday gains, as it slid from a high of 28,732 pts to close at 28,408 pts – a mere 22-pt gain. While the latest performance did not suggest a firm positive follow-through from the prior session’s price reversal “Hammer” formation, we still see the index’s overall upward move above the 50-day SMA line as intact. This positive expectation will stay, provided the 28,200-pt support continues to hold. Premised on this, we are keeping our positive trading bias.

We recommend traders stay in long positions. We initiated these at 28,179 pts, or the closing level of 7 Oct. For risk-management purposes, a stop-loss can be placed below the 28,200-pt threshold.

We are keeping the immediate support level at 28,200 pts. This is followed by the 28,000-pt round figure, which is also near 15 Oct’s low. Moving up, the immediate resistance is set at the 28,500-pt mark and followed by 28,846 pts, or the high of 12 Oct.

Source: RHB Securities Research - 19 Oct 2020