Maintain long positions. The E-Mini Dow ended the latest session 41 pts weaker at 30,868 pts – significantly above its intraday low of 30,457 pts – after experiencing a sharp rebound during the later part of the session. The positive price reaction from the 30,500-pt support level suggests the re-emergence of buyers, following the index’s retracement over the past three sessions. Overall, the recent weaknesses are still well-contained, and the risk of a deeper correction phase setting in will remain low, as long the index continues to trade above 30,500 pts. The index, which continues to trade above the 50-day SMA line, and a better RSI reading, which is below the overbought threshold, are 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.

Support levels are maintained at 30,750 pts and 30,500 pts. On the upside, the immediate resistance is revised to 31,188 pts – the record intraday high posted on 21 Jan – followed by 31,500 pts.

Source: RHB Securities Research - 26 Jan 2021