Maintain long positions. The E-Mini Dow softened for the second consecutive session, after hitting a new intraday high on 21 Jan. During intraday trade, the index generally trended lower throughout the session, hitting a low of 30,791 pts before narrowing its losses to 173 pts, and closing at 30,909 pts. The two most recent sessions’ price actions are consistent with the index’s behaviour in recent weeks, of retreating after hitting a new record high. We have yet to see signals of a price reversal. Towards the downside, provided that the 29,500-pt support level is not breached, the risk of the index developing a deeper correction phase should be contained. 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.

We are keeping the support levels at 30,750 pts and 30,500 pts. Moving up, the immediate resistance is set at 31,500 pts, followed by 31,750 pts.

Source: RHB Securities Research - 25 Jan 2021