Stay short while setting a stop-loss above the 26,238-pt resistance. The E-mini Dow formed a black candle with a long upper shadow last night. It declined 59 pts to close at 25,906 pts, off the session’s high of 26,145 pts. Technically, investor sentiment remains bearish, given that the index has marked a lower close vis-à-vis the previous session. Meanwhile, yesterday’s 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. This suggests that sellers still have control of the market.

Currently, we maintain the immediate resistance at 26,238 pts, ie the high of 25 Feb’s “Shooting Star” pattern. If this level is taken out decisively, the next resistance is seen at the 26,966 pts record high. On the other hand, the immediate support is anticipated at 25,213 pts, which was the low of 8 Mar. The next support would likely be at 24,862 pts, ie the previous low of 8 Feb.

Thus, we advise traders to maintain short positions, since we had originally recommended initiating short below the 25,707-pt level on 8 Mar. A stop-loss can be set above the 26,238-pt threshold in order to limit the risk per trade.

Source: RHB Securities Research - 20 Mar 2019