Maintain short positions, with a stop-loss set above the 26,691-pt resistance. The E-mini Dow ended higher and formed a white candle last night. It gained 289 pts to close at 25,570 pts after oscillating between a high of 25,677 pts and low of 25,217 pts. Unsurprisingly, last night’s candle should merely be viewed as a result of bargainhunting activities following the recent losses. Technically, as the 21-day SMA line is now likely to turn downwards, this indicates the negative sentiment remains intact. Overall, we keep our bearish view on the E-mini Dow’s outlook.

As seen in the chart, we are eyeing the immediate resistance at the 26,000-pt round figure – this is situated near the high of 9 May as well. The next resistance is seen at 26,691 pts, ie the high of 1 May’s “Bearish Engulfing” pattern. To the downside, we anticipate the immediate support at 25,213 pts, which was the previous low of 8 Mar. The next support should likely be at the 25,000-pt psychological spot.

Consequently, we advise traders to maintain short positions, in line with our initial recommendation to have short positions below the 26,000-pt level on 10 May. A stop-loss can be set above the 26,691-pt mark to minimise the risk per trade.

Source: RHB Securities Research - 15 May 2019