Maintain short positions. The E-mini Dow formed a “Doji” candle last night. It closed at 27,921 pts, off its high of 27,959 pts and low of 27,726 pts. Technically speaking, we maintain our negative view, as the index has continued to stay below the previously indicated 28,197-pt resistance for a week. Meanwhile, as long as the index does not recoup the losses from 2-3 Dec’s black candles, the downside swing is still in effect. As such, we believe that the bears still have control over the market.

As seen in the chart, the immediate resistance level is seen at the 28,197-pt historical high. The next resistance would likely be at the 28,500-pt round figure. On the other hand, we are eyeing the immediate support level at 27,312 pts, determined from the low of 3 Dec. If a breakdown occurs, the next support is anticipated at 26,847 pts, ie the previous low of 31 Oct.

Therefore, we advise traders to maintain short positions, given that we initially recommended initiating short below the 27,650-pt level on 4 Dec. In the meantime, a stop-loss set above the 28,197-pt threshold is advisable to minimise the risk per trade.

Source: RHB Securities Research - 11 Dec 2019