Maintain long positions. The E-Mini Dow pared all its intra-day profit yesterday, falling 111 pts to settle at 34,721 pts. The index opened higher at 34,872 pts, and gradually moved upwards throughout the Asian trading hours. It then saw mild profit-taking during the European trading hours, before bouncing off sharply at the beginning of the US trading hours – and hitting its 35,082-pt intraday high. However, the strong bullish momentum was short-lived, as it swiftly reversed south until the end of the session – reaching the day’s low at 34,694 pts before closing at 34,721 pts. Yesterday’s long upper shadow showed that bearish momentum is gaining traction in the immediate term and may follow through to test the 34,652-pt immediate support level. This, coupled with the RSI pointing lower, above the 50% level, increases the probability of a downside correction. Until the revised stop-loss is triggered, we maintain our positive trading bias.

Traders should maintain the long positions initiated at 34,709 pts, or the closing level of 22 Jul. To mitigate trading risks, the stop-loss is revised higher to 34,694 pts – 2 Aug’s low.

The immediate support level is maintained at 34,652 pts, or 26 Jul’s low, followed by 34,361 pts, which was 21 Jul’s low. The resistance levels are pegged at the possible new high of 35,200 pts, and 35,350 pts.

Source: RHB Securities Research - 3 Aug 2021