Initiate long positions. Following two sessions of declines, which saw the E-Mini-Dow come close to testing the 50-day SMA line, the index rebounded during the latest session to end 597 pts stronger, at 31,509 pts – marginally crossing above the 31,500-pt resistance level, and pushing the index slightly above its previous trading range of 31,100-31,500 pts. The relatively strong price reaction from the said SMA line, suggests the re-emergence of buyers, and that the index may be able to retest its recent high near the 32,000-pt resistance level. This positive bias is expected to stay, provided the 30,800-pt support does not fail. We switch our trading bias, from negative to positive.

Our previous short positions, initiated at 30,912 pts – the closing level of 26 Feb – were closed out at 31,500 pts, in the latest session. Concurrently, we initiate long positions. For risk management purposes, a stop-loss can be placed below 30,800 pts.

Support levels are revised to 31,200 pts, followed by 30,800 pts, which is near the 50-day SMA line. Moving up, the immediate resistance is pegged at 31,637 pts – the latest high – followed by 32,000 pts.

Source: RHB Securities Research - 2 Mar 2021