Stay short, with a trailing-stop set above the 24,496-pt resistance. The downside move of the E-mini Dow continued as expected, as a black candle was formed last night. It dropped 123 pts to close at 24,163 pts, off the session’s high of 24,445 pts. From a technical perspective, the near-term bearish sentiment stays intact as the index has erased most of the previous three sessions’ gains. Furthermore, the 14-day RSI indicator has now deteriorated to a weaker reading at 37.09 pts, which has enhanced the bearish sentiment. Overall, we expect the market to decline further if the immediate 23,978-pt support mentioned previously is taken out decisively in the coming sessions.

As seen in the chart, the immediate resistance level is maintained at 24,496 pts, set near the midpoint of 25 Jun’s long black candle. Meanwhile, the next resistance is anticipated at the 25,000-pt psychological mark. To the downside, we are eyeing the immediate support level at 23,978 pts, ie the low of 28 Jun. If a breakdown arises, look to 23,467 pts – which was the previous low of 3 May – as the next support.

Therefore, we advise traders to stay short, following our recommendation of initiating short below the 24,283-pt level on 28 Jun. A trailing-stop can be set above the 24,496-pt threshold in order to limit the risk per trade.

Source: RHB Securities Research - 4 Jul 2018