Maintain short positions. The E-Mini Dow wrote off all its intraday gains yesterday, declining 130 pts from Tuesday’s session to settle at 34,055 pts – just above the immediate support of 33,928 pts. It gapped down to open lower at 33,969 pts before gradually moving higher to hit the 34,699-pt day high during the US trading session – this was before strong selling pressure kicked in to swiftly reverse the index southwards towards the end of the session. It hit the day’s low of 33,745 pts before rebounding moderately at the 34,055-pt close – above the opening level. The session’s small white body candlestick with long upper shadow shows that strong selling pressure appeared below the 34,800-pt resistance. We also note that strong buying pressure at 33,928 pts still acts as a strong downside support. We expect the strong intraday selling pressure seen yesterday to persist breaching below the support level – supported by a weakening RSI below the 30% level. As such, we keep to our negative trading bias until the trailing-stop mark is triggered.

We advise traders to hold on to the short positions initiated at the closing level of 7 Jan or 36,107 pts. For risk management, the trailing-stop threshold is revised higher to 34,800 pts.

The immediate support stays at 33,928 pts – 1 Dec 2021’s low – while the lower support is marked at 33,031 pts, ie 24 Jan’s low. The immediate resistance is pegged at 34,800 pts and followed by 35,430 pts or 19 Jan’s high.

Source: RHB Securities Research - 27 Jan 2022