Market sentiment remains negative; stay short. The E-mini Dow formed a positive candle with a long upper shadow last Friday. It rose to a high of 25,856 pts during the intraday session, before ending at 25,756 pts for the day. We note that the index is still trading below the 21-day SMA line, which signals that the negative sentiment stays unchanged. Technically speaking, the long upper shadow shows that there was buying momentum during the day before the market pushed it down by the end of the trading session – indicating that the sellers ought to still have control over the market. Overall, we keep our negative view in our outlook.

Based on the daily chart, the immediate resistance level is maintained at 26,238 pts, obtained from the high of 25 Feb’s “Shooting Star” pattern. If a decisive breakout arises, the next resistance is situated at the 26,966-pt historical high. To the downside, the immediate support level is seen at 25,213 pts, ie the low of 8 Mar. Meanwhile, the next support is anticipated at 24,862 pts, set at the previous low of 8 Feb.

Therefore, we advise traders to stay short, following our recommendation of initiating short below the 25,707-pt level on 8 Mar. In the meantime, a stop-loss can be set above the 26,238-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 18 Mar 2019