Maintain short positions. The E-Mini Dow saw selling pressure accelerate last Friday, as the index plunged 262 pts to settle at 35,549 pts. It initially opened at 35,826 pts and rose to test the day’s high at 35,988 pts. The brief bullish momentum failed to rally the E-Mini Dow higher and selling pressure intensified from the European trading session, which dragged the index to reach the 35,486-pt day low. It then move sideways near the intraday low and closed at 35,549 pts – forming a long bearish candlestick. As mentioned in a previous note, the E-Mini Dow is still bound by the “lower highs and lower lows” bearish price pattern and should see the negative momentum follow through to test the 35,383-pt level. The downward movement will continue until the index finds its interim base with either a bullish reversal candlestick or candlestick with long lower shadow. As the bears are still in the driver’s seat, we make no changes to our bearish trading bias.

Traders are recommended to keep the short positions initiated at 35,992 pts or the closing level of 10 Nov. For risk-management purposes, the stop-loss threshold is revised to 35,900 pts from 36,200 pts.

The immediate support is changed to 35,383 pts – 27 Oct’s low – and followed by the 35,000-pt round figure. Conversely, the immediate resistance is pegged to 35,777 pts – 26 Oct’s high – and followed by 36,105 pts, ie the high of 17 Nov.

Source: RHB Securities Research - 22 Nov 2021