Maintain short positions while tightening risk management. The E-mini Dow formed a white candle last Thursday to settle 184 pts stronger at 25,759 pts. The index has been trading in a zone made up of the 50- and 200-day SMA lines over the past three weeks – this followed the sharp decline that took place between 9 Jun and 15 Jun, which saw the E-mini Dow hit a 24,550-pt low. Based on the recent technical picture, should the index manage to cross above the 26,294-pt resistance – which is also located near the 200-day SMA line – chances are high for a stronger rebound to kick in. Pending this, we are sticking with our negative trading bias.

We recommend traders stay in short positions. We initiated these at 25,165 pts, which was the closing level of 11 Jun. We revise our stop-loss to above 26,294 pts.

The immediate support is revised to 25,500-pt mark, ie near the latest low. This is followed by 25,200 pts, or the price point of 29 Jun. Conversely, the immediate resistance is now eyed at 26,294 pts – the high of 23 Jun – and followed by 26,779 pts, ie the high of 16 Jun.

Source: RHB Securities Research - 6 Jul 2020