Stay short while setting a trailing-stop above the 21,700-pt resistance. The E-mini Dow ended lower to form a black candle last night. It lost 985 pts to close at 19,981 pts, off its high of 20,954 pts and low of 18,904 pts. From a technical viewpoint, the bearish trend is likely to continue. This was after the index erased the previous day’s gains and closed below the 20,000-pt threshold. Moreover, as the 10-day SMA line is likely to turn lower, this has enhanced the bearish sentiment.

Based on the daily chart, we are eyeing the immediate resistance level at 21,380 pts, ie the high of 17 Mar. If a breakout occurs, the next resistance is seen at 22,900 pts, obtained near the high of 16 Mar. Towards the downside, we now anticipate the immediate support level at 18,904 pts, which was the low of 18 Mar. Meanwhile, the next support is situated at the 18,000-pt psychological mark.

Therefore, we advise traders to maintain short positions, in line with our initial recommendation to have short positions below the 24,675-pt level on 10 Mar. A trailing-stop can be set above the 21,380-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 19 Mar 2020