Stay short, with a stop-loss set above the 28,197-pt resistance. The E-mini Dow formed another “Doji” candle yesterday. It settled at 27,924 pts after oscillating between a high of 27,981 pts and low of 27,804 pts. On a technical basis, the negative sentiment stays unchanged, as the index is still hovering below the previously mentioned 28,197-pt resistance. That said, as long as the losses of the black candles created on 2-3 Dec are not recovered, this shows the downside swing has not diminished yet. Overall, we remain negative on the E-mini Dow’s outlook.

Presently, we maintain the immediate resistance level at the 28,197-pt record high. If a decisive breakout occurs, 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, or the low of 3 Dec. The next support will likely be at 26,847 pts, which was determined from the previous low of 31 Oct.

Hence, we advise traders to stay short, since we originally recommended initiating short below the 27,650-pt level on 4 Dec. A stop-loss set above the 28,197-pt threshold is advisable to limit the risk per trade.

Source: RHB Securities Research - 12 Dec 2019