Maintain short positions. The E-mini Dow ended the latest session marginally higher by 25 pts, to close at 27,689 pts. Earlier, it reached a high of 27,962 pts – not too far from testing the 28,000-pt resistance level. The index is currently slightly above the 50-day SMA line, and the multi-week downtrend line, and we are still of the view that further positive price follow-through is needed to confirm a valid breakout. On the downside, should the 27,450-pt support level give way, chances are high for the index’s multi-week correction phase to resume. For now, we are keeping our negative trading bias.

We recommend traders stay in short positions, and initiated these at 27,525 pts, or the closing level of 8 Sep. For risk-management purposes, a stop-loss can now be placed above the 28,000-pt mark.

The immediate support is maintained at 27,450 pts – a price point of 30 Oct. This is followed by the 27,000-pt round figure. On the upside, the immediate resistance is set at the 28,000-pt round figure, and followed by 28,367 pts, which was the high of 16 Sep.

Source: RHB Securities Research - 2 Oct 2020