Remain in short positions. The E-Mini Dow continued falling strongly last Friday despite attempting to climb higher early during the session. It closed 224 pts weaker at 34,007 pts. The index began the session at 34,237 pts and touched the intraday high of 34,500 pts before swiftly changing direction southwards. It fell sharply until the end of the session, hitting the day’s bottom of 33,900 pts before the close. The black body candlestick with long upper shadow reaffirmed the strong selling momentum that occurred on Thursday. The mild rebound that occurred during Friday’s intraday session showed that 33,928-pt level represented the strong support. With the RSI pointing lower towards the 37% mark, we expect the bears to drive the E-Mini Dow lower and breach the immediate support in the coming sessions – supported by the “lower low” bearish formation. Unless the momentum reverses, we stick to our bearish trading bias.

We suggest traders maintain the short positions initiated at the closing level of 11 Feb, ie 34,627 pts. For risk management purposes, the stop-loss threshold is pegged at 34,968 pts.

The first support is set at 33,928 pts or the low of 1 Dec 2021. This is followed by 33,031 pts, which was 24 Jan’s low. Conversely, the resistance levels are revised to 34,500 pts and then 34,968 pts, ie 15 Feb’s high

Source: RHB Securities Research - 21 Feb 2022