Maintain long positions. The E-Mini Dow reversed its momentum to a positive one yesterday, as it bounced off higher by 374 pts to settle at 35,926 pts – breaching above the 35,900-pt immediate resistance. The index opened with a neutral tone at 35,551 pts and oscillated in a sideways direction until the late US trading session – hitting the day’s low of 35,389 pts during the early US trading session. However, strong buying interest kicked in ahead of the close, which saw the E-Mini Dow propel towards the 35,969-pt intraday high prior to the close. The long white body candlestick – with lower shadow at its immediate support – signals that the recent selling pressure has turned to a buying pressure as it bounces off its immediate support towards breaching the 35,900-pt immediate resistance level yesterday. This was in line with our expectation for a positive rebound to happen above the immediate support, supported by the RSI improving above the 55% level. As such, we stick with our bullish trading bias.

We suggest traders keep to the long positions initiated at 35,212 pts. For risk management, the initial trailing-stop point is fixed at 35,383 pts, ie the immediate support.

The immediate support is revised at 35,900 pts – 26 Nov’s high – and followed by 34,383 pts, or the low of 27 Oct. The immediate resistance levels are set at 35,446 pts – 8 Nov’s high – and the 37,000-pt threshold.

Source: RHB Securities Research - 16 Dec 2021