Maintain long positions. The E-Mini Dow extended its Thursday weakness into Friday’s session, ahead of a public holiday in the US on Monday. The index reached a low of 30,502 pts – near to the 30,500-pt immediate support – before rebounding to narrow its losses to 189 pts and closed at 30,720 pts. While it briefly pierced below its multisession sideways trading range of 30,630-31,150 pts, given the positive intraday price reaction near the 30,500-pt support level, the risk for the index extending its consolidation into a deeper retracement is still considered low at this juncture. While we note that the RSI has fallen back under the resistance line – highlighting a possible fake breakout previously – until further negative price signals are observed, we keep to 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 is maintained at the 30,500 pts and 30,000-pt psychological levels. Conversely, the immediate resistance is set at 31,000 pts and followed by 31,500 pts.

Source: RHB Securities Research - 18 Jan 2021