Maintain short positions. The E-mini Dow formed a “Doji” candle last Friday. It settled at 28,168 pts after hovering between a high of 28,303 pts and low of 28,036 pts. Yet, based on the current technical landscape, we note that the index has failed to close above the previously-indicated 28,197-pt resistance – signalling that the negative sentiment remains unchanged. Again, technically, the bears may continue to control the market – as long as the Emini Dow does not negate the bearishness of 2-3 Dec’s black candles. Overall, we keep our negative view on the E-mini Dow’s outlook.

Based on the daily chart, we are eyeing the immediate resistance level at 28,197 pts, ie the high of 2 Dec’s long black candle. If a decisive breakout arises, the next resistance is maintained at the 28,500-pt round figure. Towards the downside, the immediate support level is seen at 27,312 pts, which was defined from 3 Dec’s low. The next support will likely be at 26,847 pts – this is situated at the previous low of 31 Oct.

Hence, we advise traders to stay short, following our recommendation of initiating short 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 - 16 Dec 2019