Maintain short positions. After falling below the 50-day SMA line, the E-Mini Dow’s September futures contract saw the negative momentum extend yesterday, declining 212 pts to settle at 33,693 pts. Initially, the index gapped down and started the session at 33,835 pts. It stayed sideways during the early session until it staged a short-lived rebound to touch the intraday high at 33,970 pts. The index retraced to the 33,498-pt session’s low before closing at 33,693 pts. With the RSI continuing to trend below the 50% threshold level, the negative momentum is likely to continue and may drag the index to test 33,498 pts followed by the 33,200-pt mark or the low in May. At this juncture, the 50-day SMA line will act as a resistance, adding selling pressure on the index. Since the negative momentum is growing, we maintain our negative trading bias.

We recommend traders stick to their short positions initiated at September’s futures contact – at the closing level of 15 Jun – or 34,177 pts. To manage risks, the stop-loss level is adjusted to 34,350 pts.

The immediate support is revised to 33,498 pts or the low of 17 Jun, followed by 33,200 pts – the low of 13 May. Conversely, the immediate resistance set at the 34,209 pts, ie 16 Jun’s high, and followed by 34,508 pts – 11 Jun’s high.

Source: RHB Securities Research - 18 Jun 2021