Initiate short positions below the 27,650-pt level. The E-mini Dow formed another black candle last night. It lost 302 pts to close at 27,487 pts. As the index has posted a third consecutive black candle – and dipped below the 21-day SMA line – this indicates market sentiment is turning negative. In addition, the 14-day RSI indicator declined below the 50 neutral point to flash a bearish reading at 45.92 pts, which has enhanced the negative sentiment. Yesterday’s closing also triggered our previous trailing-stop recommendation at the 27,643-pt threshold, which has captured part of the profits. Note we initially advised traders to initiate long above the 26,750-pt level on 16 Oct.

Presently, we now anticipate the immediate resistance level at 27,650 pts, ie set near the midpoint of 3 Dec’s black candle. Meanwhile, the crucial resistance is seen at the 28,197-pt record high. To the downside, we are eyeing the immediate support level at 26,847 pts, or the low of 31 Oct. If a breakdown arises, look to 26,588 pts – determined from the low of 23 Oct – as the next support.

Source: RHB Securities Research - 4 Dec 2019