Maintain short positions. The E-Mini Dow recouped strongly from its intraday low yesterday as it closed USD90.00 higher at USD33,156 – above the opening level. It opened slightly weaker at 33,052 pts and continued to fall towards hitting the intraday low of 32,167 pts. However, strong buying pressure came in during the late US trading session, which saw the index rebounding strongly towards touching the day’s high of 33,205 pts before the close. The latest “Hammer” bullish reversal candlestick indicates strong buying pressure has emerged from the yesterday’s bottom – a sign of an uptrend reversal in the coming sessions. We think the bullish reversal may appear in the coming sessions due to yesterday’s price action. However, the medium-term momentum remains bearish below the 33,824- pt resistance. With that, we retain a bearish bias until the trailing-stop mark is breached.

We advice traders to hold on to the short positions initiated at the closing level of 11 Feb, ie 34,627 pts. For riskmanagement purposes, the initial trailing-stop threshold is set at 34,500pts.

The support levels are pegged at 33,031 pts – 24 Jan’s low – and 32,167 pts. The immediate resistance is set at 33,824 pts or the high of 23 Feb. This is followed by the 34,500-pt mark.

Source: RHB Securities Research - 25 Feb 2022