Maintain short positions. The E-Mini Dow has been lifted higher by positive momentum, rising 289 pts to settle at 34,689 pts – recording back-to-back positive sessions after rebounding from Monday’s low of 33,623 pts. It began Wednesday’s session at 34,427 pts. Shortly after that, it touched the 34,361-pt session low and progressed higher towards the 34,739-pt session high before closing – forming a white body candlestick. This solid candlestick showed the bulls were in control of the session and, if the momentum extends, the index may retest July’s high at 34,975 pts. Before that, we expect selling pressure to rise between 34,700 pts and 34,975 pts. If the E-Mini Dow is able to stay above the 50-day SMA line, the positive momentum will be gradually strengthened. However, as the index has fallen short of our stop loss, we stick with the negative trading bias until the threshold is breached.

We recommend traders shift to the short positions initiated at 33,839 pts, or the closing level of 19 Jul. To control the trading risks, an initial stop-loss threshold is placed at 34,700 pts.

The immediate support is revised to 34,241 pts – the low of 6 Jul – and followed by the 34,000-pt round number. Conversely, the nearest resistance level is pegged at 34,975 pts – the high of July – and followed by 35,200 pts, or a potential new 2021 high.

Source: RHB Securities Research - 22 Jul 2021