Maintain short positions. The E-Mini Dow continued its downward movement by falling 543 pts yesterday to close at 33,722 pts – eyeing the 200-day average line. The index opened higher at 34,322 pts. It then gradually moved higher to touch the intraday high of 34,554 pts before sharply reversing the momentum following the end of Asian trading session. The renewed strong bearish momentum persisted until the end of the session, which saw the EMini Dow touch the intraday low at 33,688 pts before the close. The latest long black candlestick has strengthened the selling pressure that started from the 34,934-pt resistance, which was near the 50-day average line. This has resulted in a “lower low” bearish structure following the recent “lower high” bearish pattern. With the further declining strength of the RSI below the 40% level, we expect the index to fall firmly towards the 33,478-pt immediate support in the coming sessions. Hence, we keep to our bearish trading bias with a lower stop-loss level.

We suggest traders stick to the short positions initiated at 34,175 pts, ie the closing level of 29 Sep. To mitigate risks, the initial stop-loss mark is lowered to the 34,554-pt resistance, or the immediate resistance threshold.

The nearest support point is adjusted to 33,478 pts – 20 Sep’s low – and followed by 32,902 pts, ie 21 Jun’s low. The resistance levels are revised at 34,554 pts – 30 Sep’s high – and 34,934 pts, or 27 Sep’s high.

Source: RHB Securities Research - 1 Oct 2021