Maintain short positions while placing trailing-stop to breakeven. Yesterday, the E-Mini Dow experienced a positive price reaction from the 200-day SMA line. The index rebounded from a low of 26,162 pts to a high of 26,803 pts, before closing 148 pts stronger at 26,557 pts. Even with the positive price reaction from the said SMA line, we are not seeing a price reversal signal. Instead, it is more of a reflection that sellers are taking profit around the said line, rather than buyers starting to take back control over the price trend. While the recent sessions’ declines have been relatively sharp, it has yet to push the RSI into the oversold threshold. Maintain our negative trading bias.

We recommend traders stay in short positions. We initiated these at 28,100 pts, which was the closing level of 19 Oct. To manage risks, a stop-loss can be placed at the breakeven mark.

The immediate support is revised to 26,160 pts – near the latest low, followed by 25,880 pts, which is near the low of 30 Jun. On the upside, the immediate resistance is eyed at 26,800 pts, followed by the 27,000-pt round figure.

Source: RHB Securities Research - 30 Oct 2020