Maintain long positions, with a cautious stance. The E-Mini Dow failed to sustain its intraday gains. The index slid from the session’s 30,325-pt high, to a low 29,848 pts, before narrowing its losses to 120 pts at 29,913 pts. It is worth noting that the negative reversal took place after the cash index briefly hit another intraday record high – repeating the price pattern of the past five weeks, of reversing after hitting a new high. We are still convinced that the index’s upward move is showing increasing signs of losing momentum, and that the risk of a sudden reversal has increased. Towards the downside, we now believe that a breach of the latest low, in the coming sessions, would signal the commencement of a correction phase. For now, we are keeping our positive trading bias.

For now, we recommend that traders stay in long positions. We initiated these at 30,033 pts, or the closing level of 11 Dec. For risk-management purposes, a stop-loss can now be placed below the 29,848-pt mark.

The immediate support target is revised to 29,721 pts – the low of 11 Dec, followed by 30 Nov’s low of 29,428 pts. Meanwhile the immediate resistance is revised to 30,309 pts, which was 9 Dec’s high, followed by 30,500 pts.

Source: RHB Securities Research - 15 Dec 2020