Initiate long positions. The E-Mini Dow continued to extend its rebound for the second consecutive session. It swung from a low of 29,435 pts to a high of 29,998 pts, to test the historical high of 30,000 pts, before closing 498 pts higher at 29,908 pts – no price rejection signal was spotted. The strong price signal has effectively invalidated our previous negative trading bias, where we expected the index to remain trading in an extended correction phase. Additionally, the RSI continues to hold up well after breaking above the resistance line (as drawn in the chart), although it is near the overbought threshold. Switch our trading bias from negative to positive.

Our previous short positions initiated at 28,992 pts, or the closing level of 12 Nov, were closed out at 29,800 pts in the latest session. Concurrently, we initiate long positions. For risk management purposes, a stop-loss can be placed below 29,300 pts.

Support levels are revised to 29,600 pts, followed by 29,300 pts. On the upside, the resistance is set at the 30,000- pt record high, followed by 30,500 pts.

Source: RHB Securities Research - 17 Nov 2020