US indices traded higher on Thursday before ending in negative territory. President Trump’s positive trade comments from the previous day aided a lift early in the session before attention turned to the impeachment inquiry against the US president which weighed on risk appetite. Economic data had a muted impact as the third estimate of the 2nd quarter GDP remained unchanged at 2.0% and the US trade deficit narrowed to 72.8 billion while pending home sales increased by 1.6% in August. Today the US publishes personal spending, durable goods orders and PCE data, the Fed’s preferred gauge for inflation. The data should impact price action during the day, while trade and political headlines will remain the key drivers of price action.
The Dow lost 79 points to end at 26891 on Thursday. Initially price held above the 26900 level and traded above the trend line resistance before finding resistance at the 50-period MA and turning lower once more. Today, look for a sustained move below 26900 to maintain selling pressure with a trade below 26800 required to lead to a re-test of the support at 26720. Below 26720, the index will target the lower levels at 26660 and 26600 to form a new low on its downtrend. Failure to trade below 26720 will maintain range-bound price action while the 20 and 50-period MA provide a dynamic resistance zone.
Support: 26800/ 26720
Resistance: 27000/ 27100