Stay short while setting a stop-loss above the 28,197-pt resistance. After posting three white candles in a row, the E-mini Dow formed a black candle last night. It declined 112 pts to close at 27,902 pts after oscillating between a high of 28,047 pts and low of 27,878 pts. As seen in the chart, the index has marked a lower close vis-à-vis the previous session, which implies that the downside swing has not diminished yet. Again, from a technical viewpoint, the bearish sentiment should remain intact as long as the E-mini Dow does not recoup the losses from 2-3 Dec’s black candles. Overall, we keep our bearish view on the index’s outlook.

Currently, we are eyeing the immediate resistance level at the 28,197-pt record high. If a decisive breakout arises, the next resistance is seen at the 28,500-pt round figure. Towards the downside, the immediate support level is anticipated at 27,312 pts, ie the low of 3 Dec. The next support will likely be at 26,847 pts, which was the previous low of 31 Oct.

Hence, we advise traders to maintain short positions, given that we previously recommended 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 - 10 Dec 2019