Maintain long positions. After printing an all-time high on Tuesday, the E-Mini Dow reversed strongly yesterday, declining 384 pts to close at 36,291 pts – falling back below the 36,572-pt recent breakout level. It opened lower at 36,656 pts yesterday, then whipsawed in a positive fashion until midway through the US trading session, where it hit the intraday high of 36,832 pts. However, strong selling pressure kicked in to drag the index significantly lower towards the end of the session. It hit the session’s low of 36,279 pts before the close. The latest “black Marubozu” candlestick – which shows strong selling momentum – implies that the bears are set to dominate the coming sessions, towards the next support level of 36,113 pts. We expect the 36,113-pt level to be a strong support for the medium-term bullish structure. If the support is breached, a medium-term bearish bias would emerge to bring the index below the 50-day average line. Until the stop-loss is breached, we stick to our positive trading bias.

Traders are recommended to keep the long positions initiated at 36,455 pts – the closing level of 3 Jan. For riskmanagement purposes, the stop-loss is revised to 36,113 pts.

The immediate support is adjusted to 36,113 pts, or 28 Dec 2021’s low, followed by 35,900 pts (26 Nov 2021’s high). Towards the upside, the nearest resistance is at 36,572 (30 Dec 2021’s high), followed by 37,000 pts.

Source: RHB Securities Research - 6 Jan 2022