Maintain short positions. The E-Mini Dow managed to extend its rebound, which started on 19 May, rising 197 to settle at 34,028 pts – and reclaiming the territory above 34,000 pts. After starting Thursday’s session at 33,781 pts, it saw weak buying pressure, and dipped to the session’s low of 33,585 pts. Tracking its European peers, buying pressure accelerated in the second half of the session, lifting the index to the session’s high of 34,187 before it closed at 34,028 pts. The strong rebound reaffirmed the strong support at the 33,700-pt level. Following this, the index needs to cross above the 34,382-pt resistance level to form a “higher high” bullish pattern. Until this happens, the index is still bounded by a “lower high” bearish pattern. We stick to our negative trading bias.

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

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

Source: RHB Securities Research - 21 May 2021