Initiate long positions. After a pause during the previous session, the E-Mini Dow resumed its upward charge – ending the day 323 pts stronger at 30,950 pts. Trading started on an indecisive tone, with the index dropping to a low of 30,542 pts during Asian trading hours. From that point, momentum picked up, sending the index consistently higher towards the high of 30,990 pts. With the upside breach of the previous 30,738-pt immediate resistance level, and the index continuing to move higher above the 50-day SMA line on improving RSI readings, the possibility is high that the index has completed its correction phase, and is ready to resume its multi-month upward move. We switch our trading bias from negative to positive.

Our previous short positions, initiated at 30,110 pts or the closing level of 1 Feb, were closed out at 30,738 pts. Simultaneously, we initiate long positions at the latest closing. For risk management, a stop-loss can be set below 30,000 pts.

Support levels are eyed at 30,500 pts and 30,000 pts, which is the psychological level. Meanwhile, immediate resistance is set at 31,188 pts – the record high posted on 21 Jan – followed by 31,500 pts.

Source: RHB Securities Research - 5 Feb 2021