Maintain short positions. The E-mini Dow attempted to cross the 28,000-pt resistance with a high of 28,042 pts before closing at 27,995 pts, a 430-pt gain. While the positive performance is now placing the index higher above both the multi-week downtrend and 50-day SMA lines, and the RSI is now suggesting the price momentum is picking up, we still deem it as an indecisive breakout as the index is still capped by the 28,000 pts resistance point. Hence, 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 revised to 27,500 pts, followed by 27,109 pts. Meanwhile, the immediate resistance is set at the 28,000-pt round figure, followed by 28,367 pts, which was the high of 16 Sep.

Source: RHB Securities Research - 6 Oct 2020