Maintain long positions. The E-Mini Dow’s bulls took a breather after the market resumed from the holiday. The index corrected 217 pts to settle at 34,460 pts. After touching the high of 34,755 pts, the index fell to the low of 34,241 pts before closing at 34,460 pts – forming a Bearish Engulfing pattern with a long lower shadow. The formation showed that sentiment turned cautious as the index approached the resistance. If negative momentum follows through, and the index breaches the 50-day SMA line, we may see the uptrend taking a longer pause, and the start of a correction phase. At this juncture, we stick to our positive trading bias.

Traders should maintain the long positions initiated at 34,082 pts, or the closing level of 24 Jun. For risk management, the trailing-stop is set at 34,150 pts – a level just below the 50-day SMA line.

The immediate support is marked at 34,377 pts, or the low of 1 Jul, followed by 34,000 pts. On the upside, the immediate resistance is set at 34,825 pts, followed by 35,000 pts, which is the all-time high.

Source: RHB Securities Research - 7 Jul 2021