The Dow Index surges 3.3% on Friday in response to US economic figures reflecting a strong labor market followed by impactful dovish remarks made by Fed Chairman Powell iterating a data-dependent approach on rate hikes, thus soothing investors’ sentiment. To further support the optimism, China’s services sector grew and the Central Bank took measures to alleviate economic weakness in its nation. Nonetheless, the market’s bullish reaction didn’t account for the uncertainty that persists over the future of the two world’s largest economies and their trade dispute that is yet to be clarified in their critical meeting today. Traders should watch out for news on trade negotiations and the US non-manufacturing PMI report to impact the market.
The Dow index extends December’s correction on its bearish trend to 23621 as it crosses well above the 23340-23450 resistance zone. A sustained move above this level may allow price action to rest before moving back up. Otherwise it could fall to support zone of 23060-22852 bounded by the 20 and 50 period moving averages. The 50-period MA acts as a strong support level on the up move and decisive indicator as to whether buying pressure should be sustained.
Support: 23340/ 23066
Resistance: 23574 / 23779