Initiate short positions below the 26,663-pt level. The E-mini Dow formed another black candle last Friday. It declined 94 pts to close at 26,449 pts. Technically, the index closed below the 26,657-pt support mentioned previously and hit its lowest point in more than five weeks, implying that sentiment has turned bearish. This may also further extend the downside swing that began with 31 Jul’s long black candle. Meanwhile, 1 Aug’s closing triggered our previous trailing-stop recommendation at the 26,657 mark – which has locked in part of the profits. Note we initially advised traders to initiate long above the 25,437-pt level on 7 Jun.

Currently, we anticipate the immediate resistance at 26,663 pts, ie the high of 2 Aug. The next resistance is seen at 27,040 pts, situated near the midpoint of 31 Jul’s long black candle. On the other hand, we are eyeing the nearterm support at the 26,000-pt psychological spot. This is followed by 25,891 pts, which was the previous low of 13 Jun.

Therefore, we advise traders to initiate fresh short positions below the 26,663-pt level. A stop-loss is preferably set above the 27,040-pt threshold in order to minimise the risk per trade.

Source: RHB Securities Research - 5 Aug 2019