Maintain short positions. The E-Mini Dow showed a positive price reaction from the 50-day SMA line in the latest session. After slightly crossing below the said SMA line with a low of 28,896 pts, the index scaled higher to close 134 pts stronger at 28,268 pts. The performance is signalling a possible attempt by the bulls to reverse the index’s recent weak fortunes. However, from the price trend perspective, until further positive price actions are observed in the coming sessions to signal a change in trend, our negative trading bias stays unchanged.

As the bulls are still unable to signal a change in control, we recommend traders stay in short positions. We initiated these at 28,100 pts, which was the closing level of 19 Oct. To manage risk, a stop-loss can be placed above 28,700 pts.

We are keeping our support targets at the 28,000-pt round figure, which is also near 15 Oct’s low. This is followed by 27,500 pts. On the upside, the immediate resistance is set at the 28,500-pt mark, followed by 28,700 pts, which was a price point on 16 Oct.

Source: RHB Securities Research - 23 Oct 2020