Maintain short positions. The E-mini Dow ended higher to form a white candle with a long upper shadow last night. During the intraday session, it rose to a high of 28,573 pts before ending at 28,361 pts for the day. However, it is not surprising that sellers may be taking pause following recent losses. Technically speaking, yesterday’s long upper shadow of the candle illustrated that the market rejected higher price levels, reflecting the downward pressure remaining intact. This also indicated that the market outlook was still negative.

As seen in the chart, we are now eyeing the immediate resistance level at 28,573 pts, situated near the midpoint of 31 Jan’s “Long Black Day” candle. The next resistance is seen at 28,881 pts, which was 31 Jan’s high. Towards the downside, the immediate support level is maintained at 28,084 pts, ie 8 Jan’s low. Meanwhile, the next support would likely be at 27,726 pts, obtained from the previous low of 10 Dec 2019.

Therefore, we advise traders to stay short, given that we previously recommended initiating short below the 28,780- pt level on 30 Jan. In the meantime, a trailing-stop can be set above the 28,573-pt mark in order to secure part of the gains.

Source: RHB Securities Research - 4 Feb 2020