Stay short, with a new trailing-stop set above the 25,000-pt resistance. The E-mini Dow ended higher to form a long white candle last night. It gained 428 pts to close at 24,859 pts, off the session’s low of 24,330 pts. However, buying momentum is still considered weak, as the index is trading below the 25,000-pt resistance mentioned previously. Technically, as long as the index does not recoup more than 50% of losses created by 24 Oct’s long black candle, we believe that sellers still have control of the market. Overall, we remain bearish on Emini Dow’s outlook.

We maintain the immediate resistance at the 25,000-pt psychological spot, also situated near the midpoint of 24 Oct’s long black candle. The next resistance would likely be at 25,845 pts, ie the high of 17 Oct. To the downside, the immediate support is seen at 24,086 pts, obtained from 29 Oct’s low. Meanwhile, the next support is anticipated at 23,978 pts, ie the previous low of 28 Jun.

Therefore, we advise traders to stay short, following our recommendation to initiate short below the 25,000-pt level on 25 Oct. For now, a new trailing-stop is advisable above the 25,000-pt threshold in order to limit the risk per trade.

Source: RHB Securities Research - 31 Oct 2018