Maintain short positions. After posting two black candles in a row, the E-mini Dow ended higher to form a white candle last night. It gained 156 pts to close at 27,643 pts after oscillating between a high of 27,727 pts and low of 27,397 pts. Technically speaking, yesterday’s white candle should merely be viewed as a technical rebound following the recent losses. We think the bears may continue to control the market – as long as the index does not recoup the losses from 2-3 Dec’s black candles. Overall, we keep our bearish view on the E-mini Dow’s outlook.

As seen in the chart, the immediate resistance level is set at 27,650 pts, ie near the midpoint of 3 Dec’s black candle. If this level is taken out, the next resistance is maintained at the 28,197-pt historical high. On the other hand, we anticipate the immediate support level at 26,847 pts, which was the low of 31 Oct. Meanwhile, the next support is seen at 26,588 pts – obtained from the low of 23 Oct.

Therefore, we advise traders to stay short, in line with our initial recommendation to have short positions below the 27,650-pt level on 4 Dec. A stop-loss can be set above the 28,197-pt mark to limit the risk per trade.

Source: RHB Securities Research - 5 Dec 2019