Maintain long positions. The E-Mini Dow has likely completed its one-week correction phase and could be in the process of extending its multi-month uptrend. The index registered a 108-pt gain to settle at 30,828 pts – the intraday high was posted at 30,982 pts. The encouraging performance is a follow-through from last Friday’s positive intraday price reaction from the 30,500-pt immediate support. The relatively narrow one-week correction phase set in after the index experienced a near 1,400-pt gain between 4 and 8 Jan. The index – trading rather comfortably above the 50-day SMA line – has a current reading that coincides with the 30,000-pt psychological level and is also supportive of 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.

We are keeping the immediate support level at 30,500 pts, and followed by the 30,000-pt psychological level. Towards the upside, the immediate resistance is maintained at 31,000 pts and followed by 31,500 pts.

Source: RHB Securities Research - 20 Jan 2021