Initiate short positions below the 28,780-pt level. The E-mini Dow formed a negative candle last night. It closed at 28,710 pts, after hovering between a high of 28,888 pts and low of 28,650 pts. From a technical perspective, the index has recently taken out the 28,924-pt and 28,737-pt supports mentioned previously, implying that the sentiment has turned negative. In addition, the 14-day RSI indicator dropped below the 50 neutral point to flash a bearish reading at 49.91 pts – this has enhanced the bearish sentiment. 27 Jan’s closing also triggered our previous trailingstop recommendation at the 28,924-pt threshold – which has captured part of the profit. Note that we initially advised traders to initiate long above the 28,159-pt level on 17 Dec 2019.

Currently, the immediate resistance level is seen at 28,780 pts, ie 28 Jan’s high. The next resistance is anticipated at the 29,000-pt psychological spot, set near the 10-day SMA line as well. Towards the downside, we are eyeing the support level at 28,405 pts, ie 27 Jan’s low. This is followed by 28,084 pts, defined from 8 Jan’s low.

Thus, we advise traders to initiate fresh short positions below the 28,780-pt level. A stop-loss can be set above the 29,000-pt mark in order to minimise the risk per trade.

Source: RHB Securities Research - 30 Jan 2020