Maintain long positions. The E-Mini Dow briefly tested the resistance zone of 27,800-28,000 pts and the 50-day SMA line, with a high of 28,194 pts. This was before it gave up some of its gains to close at 27,735 pts – indicating a 359-pt gain. At this juncture, the index’s inability to settle above the abovementioned resistance levels is not sufficient to indicate a possible price rejection – although its rebound off 30 Oct’s low of 25,953 pts, of about 2,300 pts, has been very steep and vulnerable to profit taking activities. Until compelling price exhaustion signals appear, we are maintaining our positive trading bias.

We recommend traders to stay in long positions. We initiated these at 27,376 pts – the closing level of 3 Nov. To manage risks, a stop-loss can now be placed at the breakeven level.

The immediate support is revised to 27,376 pts, followed by the 27,000-pt round figure. On the upside, the immediate resistance is maintained at 27,800 pts – near the 50-day SMA line – and followed by the 28,000-pt round figure.

Source: RHB Securities Research - 5 Nov 2020