Maintain long positions. The E-Mini Dow’s weaknesses in the final few hours erased its intraday gains, sending the index 50 pts lower to close at 30,909 pts. It had earlier hit an intraday high of 31,116 pts. The performance can be seen as an extension of the index’s sideways consolidation, which has been developing over the past week. This is a healthy development, as the index needs to digest its previous week’s gains, and so far, it does not alter the index’s positive price trend. However, the risk of a deeper correction phase setting in could emerge, if the index breaches below the 30,500-pt immediate support level. Hence, we are keeping our positive trading bias.

We recommend traders stay in long positions, for now. We initiated these at 30,033 pts, or the closing level of 11 Dec 2020. For risk-management purposes, a stop-loss can now be set at the breakeven mark.

Support levels stay at 30,500 pts and the 30,000-pt psychological level. Meanwhile, the overhead resistance is set at 31,000 pts, followed by 31,500 pts.

Source: RHB Securities Research - 15 Jan 2021