Stay short while setting a trailing-stop above the 21,700-pt level. The E-mini Dow formed a white candle last night. It gained 567 pts to close at 20,966 pts. Market sentiment remains bearish, as the index continues to remain below the declining 10-day SMA line. From a technical perspective, as long as the E-mini Dow does not recoup 50% of the losses from 16 Mar’s long black candle, there is a possibility the downside move will persist. Overall, we remain bearish on the index’s outlook.

As shown in the chart, the immediate resistance level is seen at 21,700 pts, ie near the midpoint of 16 Mar’s long black candle. The next resistance would likely be at 22,900 pts – determined near the high of 16 Mar. On the other hand, the near-term support level is anticipated at the 20,000-pt psychological spot. This is followed by 19,872 pts, ie the low of 17 Mar.

Recall that on 10 Mar, we initially recommended traders to initiate short positions below the 24,675-pt level. We continue to advise them to stay short for now while setting a trailing-stop above the 21,700-pt mark. This is to secure part of the gains.

Source: RHB Securities Research - 18 Mar 2020