Maintain long positions. The E-Mini Dow had a roller-coaster session. It started the week with a high of 30,333 pts, dived to a low of 29,318 pts halfway through the session, and finally rebounded to settle at 30,092 pts. Consequently, a “Hammer” formation appeared. We view the latest performance as a strong indication that the bulls are still in firm control over the index’ price trend. The positive performance has also weakened our bias that the index is due for a correction phase – as there is still no price confirmation for this possibility. Recall that we have been highlighting that the index’s upward move lacked momentum over the past weeks – a typical precursor for potential market topping out. For now, we keep our positive trading bias.

We recommend that traders stay in long positions for now. We initiated these at 30,033 pts, or the closing level of 11 Dec. For risk-management purposes, we adjust the stop-loss slightly higher, to 29,850 pts.

The immediate support is maintained at the 30,000-pt round figure, followed by 29,850 pts. Moving up, the immediate resistance is set at 30,500 pts, and followed by 31,000 pts.

Source: RHB Securities Research - 22 Dec 2020