Stay short while setting a stop-loss above the 26,238-pt resistance. The selling momentum in the E-mini Dow continued as expected. A long black candle was formed last Friday, which pointed towards a continuation of the downside move. It plunged 441 pts to close at 25,570 pts, off the session’s high of 26,036 pts and low of 25,529 pts. On a technical basis, investor sentiment remains bearish, as the E-mini Dow erased the previous session’s gains and hit its 1-week low. Overall, we expect the market to decline further if the immediate 25,213-pt support is taken out decisively in the coming sessions.

As seen in the chart, the immediate resistance level is seen at 26,238 pts, obtained from the high of 25 Feb’s “Shooting Star” pattern. Meanwhile, the next resistance would likely be at the 26,966-pt record high. On the other hand, we anticipate the immediate support level at 25,213 pts, ie the low of 8 Mar. If this level is taken out, look to 24,862 pts – ie the previous low of 8 Feb – as the next support.

Thus, we advise traders to stay short, in line with our initial recommendation to have short positions below the 25,707-pt level on 8 Mar. At the same time, a stop-loss can be set above the 26,238-pt threshold in order to limit the risk per trade.

Source: RHB Securities Research - 25 Mar 2019