Maintain short positions. Despite paring its earlier losses, the E-Mini Dow extended its losses for the third consecutive session, falling 165 pts to settle at 33,831 pts. It started Wednesday’s session weaker at 33,899 pts. After failing to break the day’s high of 33,998 pts, it dropped to the day’s low of 33,402 pts before rebounding to close at 33,831 pts. Based on the price actions since April, there is strong buying pressure near the 33,700-pt support level. As long as the index stays above this support level, the current correction may take a pause and start consolidating sideways. Until it crosses the stop-loss, we maintain our negative trading bias.

Traders should maintain the short positions initiated at 34,183 pts, or the closing level of 11 May. For risk management purposes, the stop-loss is revised to 34,318 pts, or the closing level of 14 May.

The immediate support is revised to the 33,700-pt round number, followed by 13 May’s 33,200-pt low. On the upside, the immediate resistance is at 34,116 pts – the high of 3 May – followed by 34,382 pts or 14 May’s high.

Source: RHB Securities Research - 20 May 2021