Market correction likely to continue, stay in short positions. The E-mini Dow formed a second consecutive black candle last night – declining 260 pts to close at 25,109 pts, off the session’s high of 25,377 pts. Based on the current technical landscape, this close has taken out the previously-indicated 25,213-pt support and also sent the index to its lowest point in more than three months. This indicates that the selling momentum has extended. Overall, we believe the downside swing, which started off 1 May’s “Bearish Engulfing” pattern, may continue.

Based on the daily chart, we are eyeing the immediate resistance at the 26,000-pt round figure, which is also set near the high of 9 May. The next resistance is seen at 26,691 pts, or the high of 1 May’s “Bearish Engulfing” pattern. To the downside, we now anticipate the immediate support at 24,862 pts, which was the previous low of 8 Feb. The next support is situated at the 24,000-pt psychological spot.

Therefore, we advise traders to maintain short positions, following our recommendation of initiating short below the 26,000-pt level on 10 May. A trailing-stop set above the 26,000-pt mark is advisable as well – to minimise the risks per trade.

Source: RHB Securities Research - 30 May 2019