Bearish sentiment remains intact; stay short. The E-mini Dow formed a long black candle last night, indicating that momentum of selling could be strong. It tumbled 683 pts to close at 25,281 pts, off the session’s high of 25,818 pts. Based on the current technical landscape, yesterday’s long black candle has erased the previous day’s gains - and also sent the E-mini Dow to its lowest point in more than two months. This indicates that the downward momentum has extended. Overall, we expect the market to decline further if the immediate 25,213-pt support mentioned previously is taken out decisively in the coming sessions.

As shown in the chart, the immediate resistance level is seen at the 26,000-pt round figure, also set near the high of 9 May. The next resistance would likely be at 26,691 pts, determined from the high of 1 May’s “Bearish Engulfing” pattern. Towards the downside, we are eyeing 25,213 pts, ie the previous low of 8 Mar. This is followed by the 25,000-pt psychological mark.

Hence, we advise traders to stay short, following our recommendation of initiating short below the 26,000-pt level on 10 May. At the same time, a stop-loss is preferably set above the 26,691-pt threshold in order to limit the risk per trade.

Source: RHB Securities Research - 14 May 2019