Initiate short positions below the 25,707-pt level. The E-mini Dow ended lower to form a black candle last night. It lost 199 pts to settle at 25,467 pts. As the index has posted a second consecutive black candle and closed below the 25,600-pt support mentioned previously, this indicates that market sentiment is turning bearish. Yesterday’s black candle can be viewed as a confirmation of the bears extending the downside swing from 25 Feb’s “Shooting Star” pattern. The close also triggered our previous trailing-stop recommendation at the 25,600-pt threshold – which has locked in part of the profits – since we initially advised traders to initiate long above the 22,400-pt level on 27 Dec 2018.

Based on the daily chart, the immediate resistance is now seen at 25,707 pts, which was the high of 7 Mar. The next resistance is anticipated at 26,238 pts – this was determined from the high of 25 Feb’s “Shooting Star” pattern. Towards the downside, we are eyeing the immediate support at 24,862 pts, which was obtained from the low of 8 Feb. If a breakdown occurs, look to 24,216 pts – obtained from the low of 22 Jan – as the next support.

As a result, we advise traders to initiate fresh short positions below the 25,707-pt level. A stop-loss can be set above the 26,238-pt threshold to minimise the risk per trade.

Source: RHB Securities Research - 8 Mar 2019